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