LONDON: Slater and Gordon has suffered its worst share price slump as UK authorities probe the accounts of a company it recently bought a slice of for $1.2 billion.
Shares in UK-listed insurance technology group Quindell have been suspended as the country’s Financial Conduct Authority launched an inquiry into public statements about its 2013 and 2014 financial accounts.
Slater and Gordon, the world’s first publicly listed law firm, recently bought Quindell’s professional services division, a purchase it said would make it the largest personal injury law firm in the UK.
News of the FCA inquiry saw Slater and Gordon shares take their sharpest dive since the company listed on the share market in 2007.
The stock dived 23 per cent to an intra-day low of $4.74 on Thursday before recovering slightly to close $1.07 lower, or 17.5 per cent, at $5.06.
The shares have fallen more than 36 per cent since hitting a high of $8.07 in April.
Slater and Gordon said it was confident it had no liability in relation to the Quindell investigations because it acquired a subsidiary rather than a parent company.
It stands by its due diligence of the acquisition, which involved 70 lawyers, plus its own accounting policies.
“Slater and Gordon has been aware of the concerns raised publicly in relation to the accounting policies of Quindell at all stages of its engagement with Quindell,” the company said.
“Slater and Gordon remains confident in both its due diligence enquiries … and its accounting policies which reflect historical evidentiary experience of case file resolution in Australia and the UK.”
Quindell said a review of its accounting practices by PwC in December 2014 found some of its policies were “at the aggressive end of acceptable practice”.
OptionsXpress market analyst Ben Le Brun attributed the sell off in Slater and Gordon shares to uncertainty about the implications of the Quindell probe.
“It is an uncertainty and markets price out uncertainty, they assume worst case scenario,” he said.
“That’s why the share price is being dogged in this session.”
