Quindell under investigation by FCA

As Quindell's top number crunchers take a red pen to the group's past financial statements, the Financial Conduct Authority (FCA) has launched an investigation into statements made regarding the company's financial accounts during 2013 and 2014. Quindell shares have now been suspended from AIM and may not begin trading again until the 2014 results are published.

The FCA confirmed on Wednesday it is investigating statements made by Quindell under the Financial Services and Markets Act 2000. It's been a busy few months for the group, with PricewaterhouseCoopers (PWC) auditing its accounting policies, a disposal to streamline its operations and the launch of an in-house review. Quindell has admitted the way it recognised NIHL revenue was simply not appropriate, while its other accounting policies were on the "aggressive" side of acceptable.

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NIHL sales were generated under Quindell's professional services division (PSD), which was sold to Slater and Gordon for £637 million last month. Depending on how many NIHL cases are settled, the Aussie law firm could actually end up spending millions more on the acquisition. With bosses promising to return at least £500 million to shareholders - that's 100p per share - it's no wonder shareholdes gave the deal the nod in April.

Although the adjustments will be made to "discontinued operations" in the 2014 financial statements, management have warned that conservative sales and profit changes will "materially impact" results for the past two years.

The in-house review is looking at a number of largely non-cash historic transactions and acquisitions. More information on any adjustments will be given in Quindell's results for the 2014 financial year.

Augustin Eden, an analyst at Accendo Markets, isn't impressed: "It's the latest chapter in a story our most creative writers would be at pains to compose as, once again, the accounting methods of the golf club operator turned insurance claims outsourcer are called into question - in particular those employed under ambitious and eccentric founder Rob Terry in early 2013."

He isn't looking forward to the findings of the FCA investigation, either: "This morning saw the company announce the results of its own review into accounting practices, placing them at the 'aggressive end of acceptable.' Assuming Quindell is viewing its own behaviour through somewhat rose-tinted specs, I wouldn't even attempt to imagine what the FCA might find. You wouldn't be able to make it up," he added.

After crashing from over 600p to 24p between April and December, the sale of its PSD has reignited interest in Quindell. The shares have tripled in 2015 to 125p, which, if you strip out the 100p cash return, values the remainder of the business - Himex and iter8 connected car and telematics businesses, insurance broker Ingenie, and insurance claims management systems - at £111 million, or 25p a share.

Former Tory leader Michael (now Lord) Howard now sits on the board as senior non-executive director, adding an air of respectability absent under Rob Terry's leadership. But the company cannot close the book on its controversial past until the results of its own internal review and FCA investigation are made public. No doubt there will some sleepless nights for those involved.

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