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Who's initiative?
One of the things which remains unclear is whether the idea to obtain an independent review originated with the board of Quindell or its bankers.
No doubt PwC will move pretty fast to prepare a report and then Quindell will make a further announcement.
David
Directors' conduct [moderated comment]
Why turn to PwC at this stage – surely the best solution would have been to avoid getting in the situation in the first place.
The Gotham City Research report ‘A Country Club Built on Sand’ raised many of these issues – and Quindell shares have been shorted by a number of traders – even before the Gotham report was published.
[Ed's note - as our report makes clear, the Gotham paper has been the subject of a UK libel action that Quindell won. Some portions of this post have been moderated to protect the original poster and AccountingWEB from the risk of similar action.]
Rob Terry (founder/Chairman), Laurence Moorse (finance director) and Steve Scott (non-exec) are all leaving because of their involvement with Equities First and doubts over Quindell's investor disclosure - although some not as quickly as others & possibly with pay-offs - EH!
Canaccord Genuity resigned as Quindell's joint broker and financial adviser in October 2014 after working for the company for less than 18 months. Hhowever, conveniently just before a loan arrangement by the three aforementioned individuals on Nov 5 – leaving Cenkos Securities (AIM) as their only broker and whose shares took a large knock-on hit (16%)
The three directors loan involved using some of their existing as security to fund purchase of new shares – however, after the Regulator became involved they were admitted they had sold shares as well as buying them; with a promise to re-purchase on expiry of the 2 year loan – oops! embarrassment for their advisors
At this point Mr Terry was caught out by a drop in the share price and subsequent margin call & as a result relinquished his right to purchase the shares rather than meet the margin call.
Whatever happened to the old fashioned concept of being 'hammered'?
Backtrack – History
Quindell was floated 3 years ago, although it became apparent that the management team behind the company was the same one behind The Innovation Group (TIG) a decade ago & its subsequent crash – whose float & ensuing disatser handled Rob Terry around £100m - nice work if you can get it!
Shares went from 229 to 900, followed by warning in 2002 and then the shares bombed. Lots of staff sackings and Mr Terry received £500k payoff
However, along the way in this debacle Terry & Scott (see para 1) had taken out a huge hedge against a fall in the share price with UBS
These two (Terry & Scott) then re-surfaced with Quindell & implemented their share loan deal with Equity First Holdings.
Oh! And by the way - Laurence Moorse, also involved in the Quindell share loan deal from Equity First, was previously the UK finance director of TIG
Canaccord Genuity
Whose employee Kevin Ashton (rumour has it) raised concerns about Quindells governance, acquisitions & profitability in April also advised Canaccord to resign as joint broker – hours before the Gotham report was published. Ashton was subsequently asked by Canaccord to investigate Quindell further & came back with a clean bill of health and Quindell was then re-instated as a buy by another analyst at Canaccord
Ashton has now left Canaccord and Terry is thought to have threatened to dismiss Canaccord if their adverse research was published
These are the type of antics that Regulators should pick up - but rarely do.