Firm censured by financial watchdog
Misleading statements led to investor losses
BUSINESS: Redcentric, the Yorkshire IT managed services provider, yesterday revealed it had reached a settlement with the Financial Conduct Authority in connection with the regulator’s probe into historical accounting misstatements.
As part of the settlement, the company has agreed to implement a restitution scheme.
REDCENTRIC, THE Yorkshirebased IT managed services provider, yesterday revealed it had reached a settlement with the Financial Conduct Authority (FCA) in connection with the regulator’s probe into historical accounting misstatements.
As part of the settlement, the company has agreed to implement a restitution scheme.
The settlement concludes the FCA’s investigation with regards to accounting misstatements contained in announcements issued by the company from November 9, 2015 to November 4, 2016.
It includes an agreement to pay restitution, amounting to around £11.4m, to net purchasers of ordinary shares in the company between these dates.
The FCA has confirmed that the company will not be subject to a financial penalty.
The cash element of the scheme will be funded from the company’s own cash resources and a placing and subscription of £5.775m at a price of 110 pence per ordinary share.
Peter Brotherton, the company’s CEO, said yesterday: “I am pleased that we have now achieved an agreed settlement, having worked closely with the FCA over a number of years and having acted promptly to issue a corrective statement to the market when the misstatements were discovered.
“This is positive news for Redcentric and follows a positive start to the year.
“The conclusion of the investigation removes significant uncertainty and costs, enabling management to focus solely on future growth.
“Over the last three years a new board of directors and management team have been appointed and have worked to transform the company, optimising its products, platforms, networks, processes and structure. As a result, we now have a modern, resilient and scalable business that is fit for growth.”
Publicly listed companies must ensure the market is properly informed.
Mark Steward, executive director of enforcement and market oversight at the FCA
Mark Steward, the executive director of enforcement and market oversight at the FCA, issued a public censure to Redcentric.
Mr Steward added: “Publicly listed companies must ensure the market is properly informed with timely and true information.
“In this case, Redcentric issued misleading final year results, harming its own investors and confidence in the market. When the company revealed the true position in November 2016, many investors who had purchased Redcentric shares in the preceding 12 months suffered immediate losses.”