Market Report: Quindell's firm rebuttal of fraud accusations sparks rally

It can be tough being a Quindell investor, but at least it’s never boring.

The company, which outsources claims for the insurance industry, bombed out in April when it was hit by a damning piece of research from the little-known US outfit Gotham City Research, which admits to taking short positions in companies it covers. Since then Quindell has also failed in its attempt to join the main market and faced questions over its joint venture with RAC.

Now Tom Winnifrith, the founder of the websites t1ps.com and SharesProphet, has accused Quindell of fraud, alleging it had bought worthless companies to financially benefit “old pals” of the board.

Another headache? No. Quindell dismissed the accusations as a “regurgitation” of Gotham’s charges and pledged legal action against Mr Winnifrith. The firm rebuttal sparked a rally, with punters reassured and rumours that short sellers were closing out positions ahead of tomorrow’s half-year results. Quindell put on 27p to 195p.

Optimism continued to reign on the FTSE 100, with traders happy to send the index 38.06 points higher to 6,779.31 as a drop in inflation eased interest rate concerns.

Earlier this week, this column reported rumours that cloud computing specialist Iomart could face a fresh bid from Host Europe Holdings, backed by the private equity firm Cinven. Iomart confirmed that Cinven had said it was willing to lift its bid from 285p to 300p and talks have been extended to mid-September. Iomart climbed 12.5p to 279.75p.

Ophir Energy continued to rise after last week’s announcement of a $100m share buyback, with the oil and gas explorer up 15.2p at 229.6p. But there are whispers there could be more to the price rise, after reports over the weekend that chairman Nicholas Smith could be about to depart over recent share price underperformance. A management shake-up could leave Ophir, up 15.2p at 229.6p, vulnerable to a bid.

The slide continued at KEA Petroleum after the disappointing update from its Puka-3 well in New Zealand. The explorer closed down 0.15p at 0.97p, a near six-month low.