At the heart of the debate around Quindell, since it came under attack from Gotham Research, are a few simple questions. How was the Aim listed business built; are there inconsistencies in the accounts; and where does the group really make its money?
In pursuit of answers there are the accounts and presentations the company has published. There is the dossier from Daniel Yu’s short selling outfit Gotham Research. And there is the company’s long rebuttal.
We’re going to have a look at them and, in an attempt to work out what is going on, pick out some of the details where further clarity and context might be helpful.
First up: Legal Services. Read more
Gotham City Research, after besting Gowex in a mere week, has decided to thank the Spanish people for their support, and address investors, doubters, haters and indeed all those who care about short selling and fraud. While quoting, of course, Batman:
It is not who we are underneath, but what we do that defines us.
Gotham’s success in exposing alleged fraud at the small Spanish company Gowex — which filed for bankruptcy at the weekend as its founder admitted to falsifying accounts for the last four years — is likely to prompt some cheers for the plucky short sellers of the world.
Rather than reheating the debate about the merits of short selling, a sometimes icky business thoroughly defended in 2008 and 2009 (here, here, here and here, for instance) how about a different question to which we’d like to know the answer. What examples are there of actual market manipulation that have stuck to the shorters? Read more
So far as we can tell, Quindell sells software and provides technology based outsourcing of some sort to insurance companies, as well as a bit of telecoms services.
In response to the attack by short sellers Quindell has instructed its learned friends to take legal action, and published a detailed rebuttal. Read more
The presentation on Quindell by Gotham City Research, which the company has rejected as defamatory, is a long piece of work with plenty of screenshots of the source material quoted.
One such screenshot, on page 36 of the document, is curious for what it might indicate about the construction of that presentation. The purpose is to highlight the author of Quindell’s 2012 annual report, but note the file location.