Former shareholders of Quindell have joined together to claim damages from Watchstone Group.
Watchstone (formerly Quindell) has been served a letter from law firm Harcus Parker ahead of legal action under Section 90A of the Financial Services and Markets Act 2000, over allegedly misleading statements or omissions in Quindell’s representations to the London Stock Exchange.
The Financial Reporting Council has so far sanctioned two firms of auditors—Arrandco Audit (formerly RSM Tenon Audit) and KPMG—over their conduct in relation to Quindell’s accounts, including failing to “exercise sufficient professional scepticism”.
Its investigation came after Quindell’s 2014 accounts were published with substantial restatements of prior year revenues, profits and net assets. This turned its 2013 £83 million profit after tax into a loss of £68 million.
A Serious Fraud Office investigation into Quindell has also been going on for more than four years.
Commenting on the former shareholders’ letter to Watchstone and their complaint, Jennifer Morrissey, a partner at Harcus Parker, said: “Between 2011 and mid-2015, Quindell regularly published upbeat market announcements about its financial good health, when it knew the truth was significantly different.”
“We are rapidly building a cohort of shareholders who suffered significant losses when the share price collapsed when the truth started coming out, and we hope Watchstone will recognise the failures of its predecessor and compensate them without the need for a drawn-out legal fight.”
Watchstone recently settled its dispute with Slater and Gordon over the acquisition of the professional services arm of Quindell, now Watchstone, by the law firm’s former Australian parent company in 2015.
Slater and Gordon received £11 million as part of the settlement, with neither party admitting liability in the dispute. The balance of £39 million from £50 million held in escrow and accrued interest were released to Watchstone.
Watchstone is yet to comment publicly on the former Quindell shareholders’ claims.