The Financial Conduct Authority (FCA) is investigating accounting practices at insurance business Quindell dating from the time when it claimed to be the world’s largest stock-exchange listed legal services firm, the company said today.
The revelation appears in a statement announcing the suspension of share trading after an internal review of historic accounting practices.
The FCA investigation relates to Quindell's financial accounts during 2013 and 2014. The company made a number of eye-catching statements about its financial strength and position in the legal sector since acquiring its first legal services business in 2012. Last August, Quindell said it was the biggest listed legal services provider in the world, with turnover in the first half of 2014 up 119% to £357m.
However, following severe fluctuations in its share price, Quindell disposed of its professional services division - including its legal section - to Australian firm Slater and Gordon in a £637m deal completed last month.
In its statement to the London Stock Exchange today, Quindell said that it has begun a review, along with its auditors, of a ‘number of’ the company’s historic transactions and acquisitions.
The company said it expects to offer ‘more complete’ information in respect to its past financial position, to ensure any related party transactions are fully disclosed, and to make ‘associated corrections’.
The board said changes to to accounting policies are ‘largely of historical interest only’, but that future changes will see a ‘conservative and appropriate’ approach taken.
Pending finalisation of the audit of the group’s 2014 financial statements, the company has requested the temporary suspension of trading in its shares. It expects trading to resume ‘as soon as practicable’ once the revised 2014 financial accounts are quantified. It is the second time this year that shares have been suspended, with trading stopped in April for a ‘profits correction’.
Quindell said the FCA investigation is a separate matter to its internal audit, and that the company will ‘co-operate fully’.
Meanwhile, Slater and Gordon has moved to deny reports it is being investigated by regulators in Australia over its relationship with auditor Pitcher Partners.
In a statement to the Australian stock exchange, the firm said it had not received any 'targeted inquiries' from the Australian Securities and Investments Commission.
The statement said: 'We are aware that ASIC has been in contact with Pitcher Partners regarding its audit of Slater and Gordon as part of a routine, periodic and rotational review of the processes of auditors of publicly listed companies.
'ASIC reviews audit work in respect of a number of companies each year. ASIC's engagement with Pitcher Partners is preliminary and ongoing. We remain very confident in the robustness of our accounting practices.'