Interactive Investor

Quindell wins moral victory against Gotham

9th September 2014 10:58

Harriet Mann from interactive investor

Quindell has won a libel lawsuit against Gotham City Research, with the High Court ruling in the outsourcing firm's favour after a "coordinated shorting attack" floored the former AIM darling.

After Quindell brought libel proceedings against the research firm in April, Gotham failed to provide a defence and acknowledgement of service, thus the ruling was a default judgement.

Senior independent director and vice chairman of Quindell, Tony Bowers, said: "Whilst it is disappointing that Gotham has not been prepared to submit itself to the scrutiny of the English Courts, we have consistently stated that we believe the Gotham publication was both defamatory and deliberately misrepresentative and it is pleasing to receive validation of our claim and success in this matter."

In April, Gotham published a scathing report which claimed that Quindell's share price was worth no more than 3p and that 80% of 2012 cash profits and 42% of 2013's was unable to be reconciled. Quindell immediately refuted the claims, but failed to prevent £2 billion being wiped from its market value.

Working out damages will begin at the end of November, but the group's broker Cenkos Securities warns that it may be a challenge to receive any. However, it seems this has been more of a moral victory for management and loyal shareholders.

Quindell's share price reacted positively, up 5% in morning trading. Sophie Blandford, an equity analyst at Daniel Stewart, says the stock trades on an "undemanding" three times 2014 earnings forecasts, a significant discount to its peers. Blandford reckons the shares could be worth 1,005p one day.

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