Quindell saw its value plunge by nearly a quarter this morning after correcting a stockmarket announcement from last week relating to a complex share transaction.

The listed legal services provider had announced that three directors had purchased 1,575,000 ordinary shares, with chairman Rob Terry saying the deal reflected its ‘true value’.

To fund the acquisition, the directors each entered a loan agreement with US-based Equities First Holdings LLC that could lead to the transfer of almost 52m shares.

In a correction published to the junior AIM market, Quindell clarified that EFH paid a sum equal to 67% of the three-day average market value per share.

The company said that 10.4m shares had been transferred to EFH by the directors under the loan agreement.

The lender is under no obligation to hold or retain the transferred shares, but has told Quindell’s directors it will not engage in short-selling.

On the agreement maturing in two years, the directors are contractually obliged to buy the transferred or equivalent shares at a price equal to 69% at the date of entering into the agreement. If the share price falls to 80% of average value in the next two years, the directors are required to transfer more shares or provide cash to satisfy the difference.

In a statement, Terry said the agreements would not have been entered if the board did not remain confident of meeting full-year market expectations.

He added: ‘As previously stated and as demonstrated by the initial purchases made by the purchasing directors and the fact that the majority of the board has acquired shares recently, we believe the current market valuation of the company is materially below its true value.

‘We have made this further announcement to ensure the market is aware of the actual number of shares transferred to date under the agreements. Further announcements will be made when more shares are to be used to fund further purchases of Quindell shares in the future. For clarity, purchasing shares at the current valuation has been the motivation for entering into the agreements.’

At one point this morning, the share price fell by almost 23% to 88.69p per share. By midday it has recovered to 101p – still almost 15% down on the day.