On 26th June 2020 the Financial Conduct Authority issued a public censure to Redcentric Plc for committing market abuse between 9th November 2015 and 7th November 2016.
Financial Conduct Authority Findings | Rosenblatt’s Financial Crime Team
Redcentric, a publicly listed company founded in 1997 is a managed IT service provider offering network, cloud and collaboration solutions to a range of organisations. Redcentric’s customers includes numerous NHS trusts.
The FCA found that Redcentric had issued unaudited interim results and audited final year results which materially misstated its net debt position and overstated its true asset position in circumstances where it knew, or ought to have known that the information was false and misleading.
Accordingly, the market price for Redcentric shares were artificially inflated until the company issued its corrective statement on 7th November 2016.
The FCA acknowledged Redcentric’s cooperation during its investigation. The company took extensive steps to remedy its failings, including the commission of an independent review by an auditor, providing information to the FCA, improving systems and controls and the implementation of a compensation scheme; a first for an AIM listed company.
The FCA determined that the systems and controls had not been effective in the prevention of misconduct.
Redcentric has agreed to compensate affected investors for share purchases between 9th November 2015 and 7th November 2016. It is estimate that losses to those shareholders is approximately £43 million. The FCA has decided to impose public censure and not a financial penalty in light of Redcentric’s compensation scheme, in an effort to avoid disruption to the vital services offered by their customers at this time.
Mark Steward, Executive Director of Enforcement and Market Oversight at the FCA, said:
“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…
In this case Redcentric has agreed to provide compensation for affected investors to make good the losses while also preserving the company’s ongoing business at a time when the business is providing vitally needed services in the fight against coronavirus (Covid-19)…”
Criminal Prosecutions | Rosenblatt’s Financial Crime Team Explains
The FCA have commenced criminal proceedings against three former employees of Redcentric Plc.
These individuals are due to appear at Westminster Magistrates’ Court on 28th August 2020 facing charges of fraud and other related offences between 1st May and 31st October 2016.
Rosenblatt can help
Rosenblatt has a wealth of experience in financial crime and is uniquely placed to support clients’ that are the subject of an FCA investigation and prosecution having defended one of the largest prosecutions brought by the Financial Conduct Authority https://www.rosenblatt-law.co.uk/services/financial-crime/#white-collar-crime.
