25th Apr 2014 11:52
LONDON (Alliance News) - Quindell PLC Friday continued to reject claims made in a report from Gotham City Research LLC as "highly defamatory" and "deliberately misrepresentative," noting that Gotham City took short positions on Quindell's shares before publishing the report.
The software and consulting services company said it had taken legal action in what "it believes to be a coordinated shorting attack," and is reporting the activity to the appropriate regulatory authorities.
Quindell noted that the 74-page report from Gotham admitted that readers should "assume that, as of the publication date of the report, Gotham City Research LLC stands to profit in the event the issuer's stock declines."
Gotham City's report said that it was unable to reconcile 42%-80% of Quindell's profits, stating that they are suspect as they are explained by sales to related parties owned and operated by Quindell Chief Executive Officer Robert Terry.
"Many low quality companies and outright frauds have historically entered the public markets via reverse merger," Gotham City said in the report.
Claims included in the note are that "Quindell's New York office does not seem to exist" and that, until 2008-2009, it was "little more than a country club run by Robert Terry" that started reporting "exceptional margins just in time for its public listing."
In a detailed 22-page report, Quindell systematically responds to the claims made my Gotham City Research. In response to the headline claim that Gotham was unable to reconcile more than 40% of earnings, Quindell says that the research's underlying assumptions are inaccurate, and that Gotham has ignored certain contract wins, including with major brands such as Direct Line, the RAC, and Swinton in 2012 and 2013.
In response to claims that Quindell is fearful of being transparent with investors over its personal injury business, the company management said that Gotham has been highly selective in the slides that it references from an investor show in 2013, highlighting just four out of eighty-one slides on the first day. The remainder of the slides "contained answers to every one of the Gotham allegations and provided complete transparency on volumes," the Quindell report says.
Quindell says that there is "nothing suspicious or unusual about its office locations," however some are purely US mailing addresses and have been removed from the company website to avoid confusion.
"It is disappointing that my executive directors have been forced to spend time responding to these allegations," said Tony Bowers, senior independent non-executive director and Vice Chairman of Quindell. "I hope with this extensive response to the Gotham ?research? that investors will be reassured as to the Company?s transparent approach to investor relations," Bowers Says.
Shares in Quindell have risen from earlier lows since the publication of the response, currently trading flat Friday at 25.25 pence.
By Hana Stewart-Smith & Jon Darby; [email protected]; @HanaSSAllNews
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