The problems for British-based Quindell PLC (LON:QPP) (OTCMKTS:QUPPF), an IT consultant and outsourcing firm whose revenue models and accounting issues raised concern, continue to multiply.

Quindell

The stock was the top percentage loser on the London Stock Exchange as it revealed it might lose its premium listing on the London Stock Exchange.

Quindell did not meet certain requirements for a premium listing

A report in Reuters says the company could not meet certain requirements for a premium listing but it did not detail any specific issue inside the firm.  “The company said it could not meet a criteria which deems the applicant ineligible if its business has undergone ‘a significant change in its scale or operations’ during the last three years,” the report said.

Often times criteria for de-listing a stock can be market capitalization and related to accounting issues, a charge made by Gotham City Research which has led the stock to lose over 50 percent of its value.  The dramatic slide started April 22, the day Gotham surprised those exposed to the stock with a research report that called into question the accounting practices and special arrangements among the board of directors.

Gotham attacks Quindell

As previously reported, Gotham published a research report titled “Quindell PLC: A Country Club Built On Quicksand” that attacked Quindell in a way not often witnessed on the corporate playing field in Europe.  The report claimed up to 80% of Quindell PLC (LON:QPP) (OTCMKTS:QUPPF)’s profits are “suspect” with suspicious revenue streams between a separate joint venture between Quindell CEO’s Robert Terry and the company.  The company “began reporting Microsoft/Google-esque profit margins in 2010/2011” the report said, alluding to unsustainable underling profit picture that might not hold up over time.  It is the sustainability of profits that could be at the center of this issue.

This past Monday the Financial Times had reported progress on the company’s listing.  The report noted, however, Quindell PLC (LON:QPP) (OTCMKTS:QUPPF)’s “performance in turning profit growth into cash that has come under scrutiny in the past few months.”

Polygon lost 17% on Quindell (before the latest drop)

Just yesterday ValueWalk had reported on a large Quindell shareholder, Polygon, a UK hedge fund that lost 17% on the stock last month.  In the hedge fund investor letter reviewed by ValueWalk, there was analysis of Quindell and its financial position but no mention of troubles inside the firm that would impact its stock exchange listing.  After the Gotham report was released Polygon blasted Gotham and the research.

It’s hard to determine when to declare a winner in this fight between Quindell (Polygon) vs. Gotham.  By any measure, with the stock down over 50%, Gotham – and their unknown clients who purchased the research before it was publicly announced – are the real winners.