DWS faces Equitable legal threat

Denton Wilde Sapte faces legal action over advice given to embattled pensions company Equitable Life if it fails satisfactorily to answer questions posed by rival City practice Herbert Smith in an ongoing investigation.Last December, the Equitable - Britain's oldest mutual society - closed to further investments following the discovery of a 1.5 billion shortfall in its accounts.This was caused by a House of Lords ruling last year, compelling Equitable to honour fixed guarantee annuity rates offered to customers during the 1980s, but unsustainable when interest rates fell in the 1990s.Herbert Smith - this year appointed by a new set of directors to investigate how the Equitable can recover losses - is now writing to 20 former directors seeking their explanation for a number of issues of concern.It is also writing to Dentons seeking an explanation of its advice to the Equitable.Equitable also said that a separate investigation by PricewaterhouseCoopers into the mutual's former auditor - Ernst & Young - 'raised serious concerns'.A statement from the Equitable said: 'If we do not receive satisfactory explanations [from all the above parties], and if it is cost-effective to do so, we will commence legal proceedings...

these are very serious matters.'A spokeswoman for Dentons said: 'We are aware of the statement by the Equitable.

As yet we have received no letter from Herbert Smith, but when we do we will respond and fully assist with any clarifications.'Coincidentally, Dentons is simultaneously investigating Herbert Smith among other former advisers to the Independent Insurance, another company which collapsed earlier this year.The results of that investigation are still pending.Jeremy Fleming