WPP faces potential class action suit following Sorrell's hushed-up exit

A US law firm has launched an investigation on behalf of WPP investors following the resignation of long-time chief executive Sir Martin Sorrell for alleged "personal misconduct".

Pomerantz announced that its investigation, which could lead to a potential class action law suit, was into "whether WPP and certain of its officers and/or directors have engaged in securities fraud or other unlawful business practices".

Pomerantz, which is perhaps best known for winning $3bn for American investors after a lawsuit filed against Brazilian oil giant Petrobras, has urged WPP investors to make contact with the group.

A WPP spokesman downplayed the class action, saying: "There was an initial flurry of these sorts of firms on Martin’s departure, but they have all fizzled out, with the shares higher now than on the announcement of his resignation."

The law firm's investigation came as a result of Sorrell's resignation as chief executive in April after an inquiry into allegations of personal misconduct and abuse of company assets, something the former CEO denies. However, the legendary adman's departure was reported in the Financial Times on Monday as having been triggered by staff claims that he had bullied junior employees, plus allegations the tycoon was spotted entering an address in a London red-light district.

Over the weekend, the Wall Street Journal claimed one of the subjects of the FTSE 100 group's board investigation into Sorrell was over "whether he used company money for a prostitute", something he later “strenuously” denied.

Reports of the potential class action from Pomerantz come as more than 25% of WPP's voting shareholders are predicted to be planning to oppose its pay report at the firm's annual meeting on Wednesday and that up to 20% also plan to oppose the re-election of chairman Roberto Quarta.

As of 0850 BST, WPP shares had moved ahead 0.46% to 1,244p.