Australia’s corporate regulator has ordered Slater & Gordon to produce documents in relation to an investigation into the accuracy of its financial records, sending shares in the beleaguered law firm down more than 6 per cent.
S&G has faced a string of issues with authorities in the UK and Australia following its disastrous 2015 acquisition of the professional services arm of UK-based Quindell, now known as Watchstone Group.
S&G — one of the world’s first publicly listed law firms — said in a statement to the ASX on Wednesday that the Australian Securities and Investments Commission had served it with two notices to produce documents relating to an “investigation into the accuracy of financial records and accounts of the company for the period between 1 December 2014 and 29 September 2015”.
Asic’s probe “seeks to determine whether those financial records and accounts were deliberately falsified or manipulated and whether the company or any of its officers have committed offences”, S&G said.
The Melbourne-based law firm said it would comply with the notices and co-operate with Asic. The documents are to be produced later this month and in early January.
Shares in S&G were down 6.6 per cent at A$0.2475 at lunch time in Sydney on Wednesday.
The company’s woes can be traced back to March 2015 when it said it would buy most of troubled UK insurance claims provider Quindell for £673m, and announced an A$890m equity raising to help fund the deal. Not long after the purchase — which S&G had billed as “transformational” for the firm — Quindell came under investigation by the UK’s Serious Fraud Office for its historic business and accounting practices.
In November last year, S&G took a further blow when the UK government flagged plans to limit the number of personal injury claims.
The law firm took a hefty A$879.5m impairment charge on the business in the year through June, resulting in a net loss of A$1.02bn for the year to June, and is struggling to reduce its A$680m net debt pile. S&G, which itself is facing a class action law suit from investors related to the purchase, is planning to sue Watchstone.
Last year, after the Quindell deal, Australian regulators began a probe into how S&G accounted for “legal work in progress” and “goodwill” related to acquisitions. Asic in February said it had “discontinued its inquiries in relation to S&G’s financial reports for the years ended June 30 2014 and 30 June 2015”.
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