Slater & Gordon Ltd. plunged the most on record in Sydney after saying it misreported U.K. cashflows, extending a rout that’s wiped 42 percent off its market value in four days.
Shares in the world’s first publicly listed law firm tumbled 25 percent to A$3.78 on Monday after the company said its U.K. unit incorrectly accounted for client or tax-related payments between 2012 and 2014. Slater & Gordon said net cashflows were unaffected in the period.
A U.K. regulator said last week it was investigating the British company that sold a division to Slater & Gordon earlier this year. The latest disclosure has eroded investor faith in the company and the integrity of its figures, according to Morningstar Inc.
“The picture is uncertain now and that is what’s causing the market to be scared,” said Farina Parsons, an analyst at Morningstar in Sydney. “Until that’s fully resolved, the market will remain wary of the company.”
The U.K. Financial Conduct Authority said last Wednesday it was investigating Quindell Plc after the technology company said some of its accounting policies were “at the aggressive end of acceptable practice.” Slater & Gordon bought Quindell’s professional services division for 637 million pounds ($1 billion) in May. News of the U.K. probe triggered a 17 percent slide in Slater & Gordon’s stock on June 25.
The law firm said in a statement to the stock exchange Monday it is preparing responses to queries from Australia’s market regulator over its audit process.
Initial analysis revealed a “consolidation error in the reporting of the historical U.K. cashflows,” Slater & Gordon said. The law firm’s U.K. business made two errors in reporting receipts from customers and payments to suppliers and employees, it said.