Slater and Gordon shares jump after reports of a UK fraud investigation

Photo: Jack Taylor/Getty Images

Shares in Slater and Gordon soared after confirming authorities are investigating fraud allegations about the company the law firm bought a UK business from.

At the close, the shares were up 4.7% to $0.11.

Slater and Gordon bought the professional services arm of Quindell, now called Watchstone Group, in 2015 for $1.3 billion.

The business has caused many of the the law firm’s problems, with revenue falling well below projections for the traffic accident compensation practice.

In 2015 Slater and Gordon shares hit a high of $8.07, valuing the company at $2.8 billion, but have been on steep slide because of its underperforming UK business.

Today Slater released a statement saying it has received a notice from the UK Serious Fraud Office requiring production of documents. This notice names Watchstone as being under investigation.

Slater and Gordon Limited is filing a claim against Watchstone in UK’s High Court for £600 million ($A1.05 billion), over “fraudulent misrepresentation”.

The Australian law firm in February reported a $425.09 million loss for the six months to December. The result included a $350.3 million impairment charge against the value of its UK business.

In August last year, the world’s first stock exchange-listed law firm posted an annual loss of $1.017 billion. That result included a $879.5 million non-cash impairment against the value of goodwill on its UK business.

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