Bad line: Investors to sue BT over accounting slip-up that wiped billions off its market value

 
Shruti Tripathi Chopra
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BT could be hit by legal action from its shareholders following an accounting scandal that rocked the telecoms company last year.

Law firm Quinn Emanuel Urquhart & Sullivan is mulling a potential lawsuit on behalf of institutional investors over the impact of the accounting scandal being worse than originally stated.

The group announced writedowns of £145m in October last year after an internal investigation into accounting practices in its Italian business. However, the company revised the figure to £530m in its third quarter results announced last month.

This led to BT's shares tanking 19 per cent and over £8bn being wiped off its market value.

Read more: BT boss tells City A.M.: Italian problems have not spread

Oliver Middleton, of counsel, Quinn Emanuel Urquhart & Sullivan, told City A.M. that the law firm is "moving forward fast" and is "already in contact with various shareholders and funders and have had a number of both express interest".

The law firm expects to take three to six months to put the claims together. The case could be brought as a "Damages Based Agreement" where the shareholders will agree to pay the lawyer a percentage of sums recovered in a claim.

A BT spokesperson said: "These cases are standard procedure. Our position will, of course, be defended robustly."

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