The corporate watchdog has dropped its investigation into debt-strapped listed law firm Slater and Gordon after finding no evidence it had manipulated its accounts in the lead-up to its disastrous foray into the UK.Â
Slater and Gordon told the market on Friday that the Australian Securities and Investments Commission has concluded its investigation "with no enforcement action".
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Slater and Gordon posts heavy losses
Law firm Slater and Gordon reports a net loss of $425 million in the six months to December 31. (Vision courtesy ABC News 24)
The dropped investigation will no doubt help the company, which is working hard on finalising a debt-for-equity swap with the distressed debt buyers that are its new senior lenders.
The debt-for-equity swap is expected to be bad news for shareholders, whose holdings will be heavily diluted in the impending restructure.
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"ASIC's investigation was focused on the accuracy of financial records and accounts of the company for the period between December 1 2014 and September 29, 2015 and, in particular, whether those records and accounts were deliberately falsified or manipulated and whether the company or or any of its offices have committed offences," the company said in its statement to the Australian Securities Exchange.
"ASIC has stated in its correspondence that the information and evidence available to it following its investigation does not indicate that there was a breach of law and it will not take any enforcement action," the company said.
It was the second ASIC investigation in the financially troubled Slater and Gordon. The first, launched in 2015, resulted in Slater and Gordon restating its accounts.
Slater and Gordon has been in financial trouble since midway through 2015 when its $1.3 billion acquisition of the professional services arm of British group Quindell blew up as a result of accounting irregularities in that company's books.Â
The resulting impairments, weakness in its UK business and a softening of its Australian revenues have led to the company's share price falling from more than $8 in April 2015.Â
Following the announcement on Friday morning, the company's shares jumped 13.6 per cent to 12.5¢.Â
The group is still facing a $100 million class action from rival Maurice Blackburn in the Federal Court.
In recent weeks, lawyers for Slater and Gordon have told the Federal Court they expected the restructure to ringfence the assets of the group from the class action claim.Â
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