On Thursday, legal firm Harcus Parker announced it had sent a letter before action to AIM-listed tech company Watchstone Group PLC (LON: WTG) – previously Quindell – on behalf of the Company’s shareholders, who lost money as a result of Quindell’s alleged misinformation.
Elsewhere in the tech sector; AdEPT Technology Group PLC (LON: ADT) and Echoh PLC (LON: ECK) both posted strong half year results, while Infineon Technologies AG (ETR: IFX) and Microsaic Systems PLC (LON: MSYS)enjoyed revenue hikes.
Harcus Parker said the claims would be bought pursuant to section 90A of Financial Services and Markets Act 2000, which deals with misstatements and omissions by listed companies.
So far, the Financial Reporting Council has sanctioned KPMG and Arrandco Audit over their conduct in relation to Quindell’s accounts, which involved a failure to “exercise sufficient professional scepticism” – hardly unsurprising to those who know the race to the bottom caused by the auditing cartel.
The investigation follows the publication of Quindell’s 2014 accounts, which detailed, “substantial restatements of prior year revenues, profits and net assets. This turned its 2013 £83m profit after tax into a loss of £68m.”
An investigation has also been conducted by the Serious Fraud Office into Quindell (Watchstone Group) for more than four years.
The claim being heard from Harcus Parker – on behalf of Quindell investors – alleges that Quindell provided misleading information in the following areas:
- Between 2011 to 2014, Quindell provided misleading information and/or failed to disclose material facts to its auditors;
- Quindell overstated the revenues and profits it received from claims company TMC (Southern) Ltd, which led in part to the restatement of Quindell’s past accounts;
- Quindell issued misleading statements on the fees paid to Ubiquity Capital in connection with various acquisitions;
- Quindell issued misleading statements about the financial performance of PT Healthcare Solutions Corp, a Canadian company in which it bought a 26% stake;
- Quindell issued misleading statements on the ability of Himex Ltd (now Hubio Solutions Ltd) to enhance the company’s earnings after its acquisition;
- Quindell issued statements about its planned listing on the full London Stock Exchange when there was no reasonable prospect of this occurring;
- Quindell delayed disclosing publicly by more than a year that it was being investigated by the Financial Reporting Council;
- Quindell overstated the likely contribution to its revenue of an increase in noise-induced hearing loss cases;
- Quindell delayed informing the market that Canaccord had resigned as its joint broker and financial adviser; and
- Quindell issued misleading statements relating to the financing of directors’ share transactions, including those of former chief executive Rob Terry.
Speaking on the announcement, Partner at Harcus Parker, Jennifer Morrissey, offered the following insight,
“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.”
The law firm concluded its statement with the following statement,
“Shareholders of Quindell between May 2011 and 5 August 2015 may be eligible to join the action. A fact sheet is available here and interested shareholders should contact Harcus Parker direct.”