Shares of embattled legal eagle Slater & Gordon Limited (ASX: SGH) fell as much as 3.2% today, making the company one of the worst performing stocks on the S&P/ASX 200 (Index: ^AXJO) (ASX: XJO).
The once majestic Slater & Gordon's shares have come under intense selling pressure over the last six weeks or so, over which time the stock has nearly halved in price upon the announcement of two investigations into its business.
The first investigation, announced on 25 June, is being conducted by the United Kingdom's financial watchdog, the Financial Conduct Authority (FCA), which is investigating the activities of Quindell Plc from which Slater & Gordon acquired its professional services division earlier this year for approximately $1.2 billion.
Although Slater & Gordon is confident that it has no liability in relation to the investigation relating to Quindell, the market doesn't share the same conviction.
The second investigation is being conducted by Australia's own financial watchdog, the Australian Securities and Investments Commission, or ASIC, which is running a probe into Slater & Gordon's relationship with audit partner, Pitcher Partners. It has since been confirmed that two errors had been found, while early analysis undertaken by VGI Partners has suggested there could be more mistakes waiting to be found.
While Slater & Gordon's shares enjoyed a temporary bounce roughly a fortnight ago, those gains have been all but wiped out with the stock once again trading at just $3.35. That's down 48% from its peak in June, and down 58% since the stock hit an all-time high of $8.07 in April this year.
Although investors might be tempted to take a bite of Slater & Gordon at its current depressed price, they should also be wary that more errors could come to surface which could damage the shares even further. Until the company can provide further guidance and until the investigations are finalised, investors may be wise to consider some of the market's other alternatives.
