Memery Crystal has been reported to the Metropolitan Police for allegedly filing false statements under the Companies Act on a 1999 AIM flotation.
The controversy surrounds private equity company IEQ, which has since delisted from AIM and seen its former directors resign to be re-placed by the businessman reporting Memery Crystal to the police, Greg Lloyd Smith.
In a letter to the police, seen by The Lawyer, Lloyd Smith alleges that IEQ's former directors falsely declared that IEQ had £50,000 allocated in share capital on flotation, and that this false declaration was presented by Memery Crystal, the company's lawyers at the time.
According to the Companies Act, any person making such a statement that they know is false faces up to two years imprisonment. Lloyd Smith has reported the company's former directors to the police for the same offence.
He has also reported former Memery Crystal partner Jonathan Wright. Wright is now a director at Seymour Pierce, the investment boutique which floated IEQ on AIM, and which is one of the law firm's biggest clients.
Emails between Lloyd Smith and a Metropolitan Police officer show that no charge has been made against any of the parties.
Lloyd Smith, advised by Marriott Harrison, has also launched a civil claim against Memery Crystal for negligence and another £3m case against the former directors and Seymour Pierce.
Memery Crystal is defending the former directors and Seymour Pierce in the civil claim.
Memery Crystal litigation partner Harvey Rands dismissed Lloyd Smith's allegations. "IEQ has been suing clients of mine for 15 months," he told The Lawyer. "Since we took up their defence, he's also brought allegations against Memery Crystal and said we should no longer act. He has recently sought to have us debarred from the case, including an application to Mr Justice Patten last Tuesday [15 April], which was unsuccessful. He's reported us to several regulatory authorities. We haven't been contacted by any regulatory authority. If we ever are contacted by them, we'll give them the same explanation we have given IEQ, which we take the view is satisfactory."