Quindell are in the process of taking legal action challenging the perpetrators of these allegations.
The following 10 points are in my view a very good indicator as to why the business isn’t a fraud.
1) Institutional Investors confidence in business.
Institutional investors would not loan out their shares to shorters. If the business was a fraud and went bust these investors would receive nothing for their investment.
If Institutional Investors believed Quindell was a fraud, since becoming major investors, they would have recalled their shares and disposed of their holding. No Institutional Investor has done this.
2) Corporation Tax
Why would any company overstate its profits and pay £30.7m (6 month period ending June 2014) Corporation Tax?
Simple answer is you wouldn’t. You would only pay Corporation Tax if a legitimate business.
3) Forensic analysis of accounts and business
Due to the many spurious allegations the business has had its accounts and any announcements forensically challenged for accuracy. No professional organisation has found anything of concern.
It is inconceivable with the allegations about Quindell accounting practices that KPMG haven’t gone the extra mile and checked every single detail before signing off the accounts.
It is also worth noting three brokers have carried out an in-depth analysis of the business and would not risk their reputations unless 100% convinced of the business model.
4) Major Contract Wins
No organisation would sign a major contract with Quindell without carrying out due diligence. Quindell are still signing major contracts.
5) Whistleblower allegations
If a whistleblower makes a serious allegation and these become public knowledge, action when substantiated is taken immediately. For example Tesco, Gowex and Enron.
No whistleblower has made any substantiated allegation regarding Quindell.
6) Debt Position
Quindell has no longterm debt. Companies that generally turnout to be a fraud have longterm debt.
7) Rob Terry Investment
Why would anybody invest £12m+ in a business with the purpose of committing fraud? It doesn’t make sense.
RNS 5th November puts all of Rob Terry’s shares at risk if business doesn’t deliver. Why would anybody do this if a fraud?
8) Those making allegations of fraud
The majority of those claiming that Quindell is a fraud are benefitting financially by making these claims. This is mainly by having a short interest in the stock or by driving traffic towards a website in which they have a financial interest.
9) Ability to operate
Quindell have over 4000 employees and considerable overheads. How is it possible to pay staff and suppliers if the company doesn’t generate cash and doesn’t have debt?
If cash was an issue the business would be asking its shareholders and bankers to further invest in the business.
The business also does not have loads of County Court Judgements against it. This generally being an indicator when a business is in trouble.
10) Numerous requests that authorities investigate Quindell
Not one organisation or public body has said they are investigating Quindell.
Based on the above any reasonable person would conclude Quindell is a viable business and not a fraud.