Watchstone whacked with legal claim from Quindell's 'misled' investors

Watchstone Group, the company formerly known as Quindell, has revealed that a £9.4m 'class action' legal claim has been filed by a group of 342 disgruntled shareholders.

The claim has been filed under the Financial Services and Markets Act 2000, the company said, without giving further details, though it is understood to be section 90A.

Law firm Your Legal Friend, a Birkenhead-based compensation specialist formerly known as Camps Solicitors, is acting on behalf of the claimants.

Watchstone said it was not yet "in a position to verify the assertions in the letter of claim" but that the letter of claim "details the expected value of the potential claims against the company to be approximately £9.4m".

The contents of the letter are confidential and subject to legal privilege, but according to Your Legal Friend's website, the firm is in broad terms contending that Quindell, which last month voted through its change of name to Watchstone as it seeks to finalise details of its 90p special dividend payment, misled investors through a series of RNS announcements and in its historical published accounts.

The law firm claims to have been contacted by around 500 potential claimants, and rising, and said it saw the "clearest route in most cases" as likely to be a claim against the AIM-listed company under section 90A of the FSMA 2000.

This section, the legislation reads, "makes provision about the liability of issuers of securities to pay compensation to persons who have suffered loss as a result of (a) a misleading statement or dishonest omission in certain published information relating to the securities, or (b) a dishonest delay in publishing such information".

"Unfortunately, this area of law is still relatively untested in the courts," Your Legal Friend said on its website.

"We have recently undertaken an initial conference with one of the barristers we expect to instruct. We now believe that the clearest cases are likely to be those where an investor has acquired shares following a demonstrably misleading published statement or dishonest omission."

Last month Your Legal Friend also told Watchstone it was also working on a second, similar sized claim.