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SLATER and Gordon (ASX: SGH) has filed a lawsuit against UK-based Watchstone Group concerning the ill-fated sale of its subsidiary Quindell in 2015, a transaction which ended up wiping more than $1 billion from SGH's total market value.
The Melbourne-based firm is suing Watchstone in the High Court of England and Wales, alleging that the company and its senior managers made "fraudulent misrepresentations" surrounding the sale of Quindell.
Watchstone revealed last month that Slater and Gordon intended to "make a claim for a total amount of approximately £600m on the basis that but for fraudulent misrepresentation it would not have entered into the transaction at all".
At the time Watchstone said the claim was "groundless" and that it was prepared to fight any legal proceedings which followed.
"Watchstone denies any misrepresentation in the strongest terms and remains satisfied that neither the warranty claim nor a misrepresentation claim have merit and will defend such claims robustly if proceedings are brought," said the company.
Ever since Slater and Gordon purchased Quindell in 2015, the company has been beset by legal troubles which have resulted in an unprecedented share price drop which shaved around 98 per cent off its total market cap.
Not only has the company been forced to enlist an army of secondary debt buyers in order to stay afloat, it is also the subject of a class action lawsuit brought by Maurice Blackburn on behalf of aggrieved SGH shareholders.
In a separate statement yesterday, Slater and Gordon also revealed that another rival firm Johnson Winter & Slattery (JWS) also intends to launch a class action, one spearheaded by shareholder Babscay Pty Ltd.
JWS has officially notified Slater and Gordon of its intentions, although no claim has yet been filed or served, and full details of the potential case have not yet been disclosed.
While Slater and Gordon's stock is still a far cry from what it was in 2015, for the first time in a long time SGH shares spiked today by 13.6 per cent to trade at almost $0.10 (as of 10:53am AEST).
Watchstone Group's shares (LON: WTG) on the London Stock Exchange have also dropped by 10 per cent (as of 10:53am AEST).
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