Significant investment losses may be directly attributable to ‘extremely misleading statements’
A law firm is looking to bring a mass action against Quindell and its executives on behalf of shareholders who it claims have suffered significant financial losses because of “extremely misleading” statements by the company and its board.
Your Legal Friend said that company announcements made to the AIM market suggest that, at the very least, significant mistakes had been made by the board in its published statements.
“Retail investors have seen the value of their investment in Quindell plc destroyed eight months after shares peaked at over 650p.
“Now those shares are trading at rock bottom levels following the most recent announcement that former executive chairman, Rob Terry, is disposing of his substantial shareholding at prices substantially below those he claimed only a few weeks ago represented a three or four-fold undervaluation,” the law firm said.
Your Legal Friend chief operating officer Colin Gibson said: “We are very concerned that many shareholders and former shareholders have suffered significant investment losses that may be directly attributable to statements by the company and its board that have proved to be extremely misleading. We are actively investigating and advancing plans to launch a class action on behalf of affected shareholders.
“I therefore urge current and former Quindell shareholders who believe that they may have been affected in this way to contact our legal team as soon as possible. Our professional negligence experts are working with currently available evidence to develop a compelling case for action against the company.”
Quindell declined to comment.
Gibson told Insurance Times that his firm would look to launch the class action in early 2015, dependent in part on the pace of company developments and the level of short-term shareholder response it receives.
“Viability will depend on reasonable numbers of shareholders coming forward, but also the nature, causation and timing of their losses versus the actions and statements by the company and on initial views from counsel on the best approach and timing,” he said.
“At present, many shareholders may believe that a substantial recovery in the share price is still possible and, therefore, dismiss the proposed action. If, as we believe, it will shortly be clarified that this is not the case, we expect to benefit from a shift in their thinking.”
Your Legal Friend has four other class actions in progress, three for personal injury arising from fires and pollution and one linked to property investment. In its largest class action it is representing 18,000 Kirkby, Merseyside, residents against chipboard manufacturers Sonae, arguing that the fire at the plant this year affected their health.
The law firm cited Quindell’s misleading published statements, including financial results that commentators expect will be materially restated in the future; confirmation of progress towards a main market listing followed two days later by an announcement that this had been rejected; announcement of significant share purchases by directors followed by a correcting announcement three days later that indicated the substance of these transactions was in fact director share sales and that the share sales were made after the company’s joint brokers Canaccord had resigned but before the market had been told.