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Further scrutiny: Banks order investigative review of Slater and Gordon’s books

Australian-listed Slater and Gordon is facing further inquiry as the company’s lenders have appointed their own investigative accountants to look at the firm’s books.

The revelation follows the firm withdrawing earnings guidance late last year, which prompted rival firm Maurice Blackburn to open registrations to shareholders wanting to pursue a class action.

Shares in the stock which traded at A$6.41 a year ago closed today (7 January) at A73c, a decline of almost 90%. The firm, which makes 80% of its UK revenue from personal injury claims, lost half its stock market value in November after the UK government unexpectedly announced plans to limit the number of personal injury claims.

In a statement to the Australian Stock Exchange the firm, which has already faced scrutiny after its A$1.3bn acquisition of Quindell, confirmed McGrathNicol has been separately appointed to look at its accounts, at the request of its lenders.

Group managing director Andrew Grech said in a statement it had commenced a review of the company’s forecasts by group CFO Bryce Houghton and independent advisers by the board.

‘We agreed that our banking syndicate would appoint their own advisers who will work alongside those appointment by the board. The company has continued to work collaboratively and cooperatively with the banks and our advisers.’

When opening registrations for the class action last year, Maurice Blackburn principal Jacob Varghese said it was becoming hard to believe the company had proper systems in place.

“We know that poor business decisions or a price drop of themselves don’t satisfy the requirements of launching a class action, but we are now firmly of the view that the activities of SGH require proper scrutiny by the best.’

Read more about Slater & Gordon in the comment piece: ‘Guest post: Why the fuss over Slater and Gordon?’