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The FCA has published final notices in respect of its enforcement action against two former finance directors of Carillion plc for breaches of the Listing Rules and UK Market Abuse Regulations (MAR). The publication of the notices follows the withdrawal by the directors of their appeals against the FCA's initial decision.
Carillion was a construction, project finance and support services business which went into liquidation in January 2018. In July 2017, Carillion had announced a provision of £845 million, which effectively wiped out its profits over the previous six years. The company's share price fell by 39% on the day of the announcement and by 70% within three days. None of the announcements made by the company in the period prior to the July 2017 announcement gave any indication that such a provision was likely to be required.
The FCA was of the view that the deterioration in financial performance had been reported to the executive directors but they did not disclose it to the board or audit committee. Accordingly in June 2022, the FCA found that the company had breached the following, and that three executive directors were knowingly concerned in these breaches:
- Listing Principle 1 (adequate procedures, systems and controls);
- Premium Listing Principle 2 (now Listing Principle 4 – acting with integrity);
- Listing Rule 1.3.3R (misleading information must not be published); and
- Article 15 of MAR (market manipulation).
See our blog post here for more detail on the June 2022 decisions.
All three directors referred the FCA's decisions to the Upper Tribunal but two have now withdrawn their appeals and the final notices in respect of them have been published. The financial penalties which the FCA had provisionally imposed on them have been reduced from £318,000 to £232,800 and £154,400 to £138,900, in acknowledgment of the directors' co-operation with the FCA (and because the salary of one of the directors was incorrect when calculating the provisional fine).
The third director is continuing his appeal against the FCA's decision and the hearing in the Upper Tribunal against this decision is scheduled to start next month.
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