(Bloomberg) -- The founder of New York short seller Gotham City Research LLC says he feels "vindicated" after U.K. regulators fined the accountants for Quindell Plc 700,000 pounds ($980,000) over their role in the software provider’s misstatements.
Gotham in 2014 published a report questioning Quindell’s finances, triggering a 39 percent one-day drop in the company’s shares. Arrandco Audit Ltd., formerly RSM Tenon Audit Ltd., and one of its audit partners were fined for their roles in assisting Quindell’s financial misstatements, the U.K. Financial Reporting Council said in a statement Tuesday. Quindell changed its name to Watchstone Group Plc in 2015.
"We feel vindicated, and would not be surprised to see other members of senior management and the chief architects of Quindell also be held responsible," Gotham founder Daniel Yu said in an interview. "It was a Bitcoin-like stock, with a parabolic rise in share price, despite there being notable mistakes in the accounts early on."
The U.K. Financial Conduct Authority opened an investigation in 2015 and fined brokerage Cenkos Securities Plc 530,500 pounds the following year for misleading the regulator over Quindell’s eligibility for a premium listing. The U.K. Serious Fraud Office started a criminal probe in 2015.
RSM audit partner Jeremy Filley was fined 56,000 pounds by the FRC and Arrandco must pay 90,000 pounds in costs on top of its fine. Watchstone didn’t immediately respond to a request for comment. A spokesman for RSM UK Group LLP, which owns Arrandco and where Filley still works, said it would be inappropriate for the firm or for Filley to comment on the case.
Gotham shot to fame with a 2014 report alleging fraud at Spanish Wi-Fi provider Let’s Gowex SA. Gowex later filed for insolvency and its chief executive officer resigned after admitting he reported false financial results for at least four years.
Last year, the short seller attacked technology company Criteo SA and AAC Technologies Holdings Inc.
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