Slater & Gordon faces new (third) class action - this explains the mad Quindell deal
Aussie law poltroons Slater & Gordon (SGH) has admitted that it has received another claim for damages to add to two existing class action suits. The latest is from lawyers Johnson Winter & Slattery Lawyers acting for investor Babscay and alledges that there were misleading representations in the company’s 2013, 2014 and 2015 financial statements. This sheds a very interesting light on the £649 million purchase of Quindell (QPP).
The latest law suit only adds to S&G’s woes. Its shares were A$8.07 as it announced the Quenron deal – today they are 9,3 cents and overvalued at that price.
But if the Babscay claims are proved surely it is only a matter of time before the Australian regulators and police are forced to look at S&G and the Quenron deal. We know that S&G could have paid as little as £50 million for the worthless Quenron assets and Quenron’s banks would have forced it to accept. So why did it pay so much more?
The answer is that S&G was already in deep trouble, burning cash and cooking its books. What it attempted was a Hail Mary pass.But in arguing that Quindell would contribute more than 50% of the earnings of the enlarged group it felt it had to pay £649 million rather than peanuts in order to justify its own inflated valuation. That the Quindell earnings were patently bogus seemed not to matter.
But Slater and Gordon is already facing allegations, with rival law firm Maurice Blackburn leading a class action representing thousands of shareholders over disclosure of financial information between March 2015 and February 2016. ACA Lawyers is also investigating a potential class action relating to a period between August 2014 and February 2016.
S&G is itseld suing Watchstine (WTG), Quenron as was, for $1 billion, claiming that the Brits misrepresented the assets sold to the poltroons. Given the mountain of eveidence that Quindell was a fraud that appeared here before S&G did the deal and S&G’s claims to have done full due diligence that claim looks dubious.
Hence, that S&G shares will trend towards zero is not in doubt. The issue is when the authoritues are going to launch a criminal investigation into what now appears to have been a monumental fraud for many years. And it is individuals not companies that commit fraud.
SGH Price at posting:
9.4¢ Sentiment: None Disclosure: Not Held
