Legal action set as BT shares plunge over Italian scandal

Law firm Quinn Emanuel is fronting a potential lawsuit which is thought to involve several major shareholders.

Richard East, Quinn Emanuel’s co-managing partner in London, said: “We are in contact with our clients and expect to form a group of substantial institutional investors.

“We have not decided whether this will be a funded case or whether we will bring this as a Damage Based Agreement.

“We confirm that we are in preliminary discussions with both shareholders and a number of funders.”

Shares plummeted 19% when BT first revealed details of the scandal last week, wiping £8 billion off its stock market value.

The company’s stock has yet to recover and shares are still trading around 19% down.

BT also warned that profits would take a hit from the debacle, which will see it book a £530 million writedown, a figure that was revised up from a previous estimate of £145 million.

A statement from Quinn Emanuel read: “Quinn Emanuel is investigating potential actions against BT on behalf of shareholders following revelations that the impact of an accounting scandal in its Italian business was four times worse than originally stated.

“The revelations have already led to BT issuing a profit warning and caused significant falls in its share price.”

The US law firm specialises in corporate litigation and has worked on similar high-profile actions, such as the Volkswagen emissions case in Germany and the RBS rights issue case in the UK.

A BT spokesman said: “These cases are standard procedure.

“Our position will, of course, be defended robustly.”