- in United States
- with readers working within the Banking & Credit industries
- within Transport, Media, Telecoms, IT, Entertainment and Family and Matrimonial topic(s)
- with Senior Company Executives, HR and Inhouse Counsel
The FCA has published final notices for Carillion and its former CEO for breaches of the Listing Rules and the UK Market Abuse Regulation (MAR). The publication of the notices follows the withdrawal by the CEO of his appeal against the FCA's decision. Two former finance directors withdrew their appeals last month (see our blog post here).
Carillion was a construction, project finance and support services business which went into liquidation in January 2018. In July 2017, Carillion 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 found 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- Listing Rule 1.3.3R (misleading information must not be published); and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All three directors initially referred the FCA's decisions to the Upper Tribunal but all have now withdrawn their appeals. The CEO has been fined £237,700, reduced from the £397,800 in the decision notice published in June 2022. The reduction is to reflect his correct salary, his co-operation with various FCA investigations and his earlier agreement not to contest certain allegations made against him.
Carillion was only censured but the FCA said that, if the company had not gone into liquidation, it would have been fined £37,910,000.
The three former executives fined by the FCA gave disqualification undertakings in 2023, in which they agreed not to be concerned in the management of a company for a specified number of years. The Insolvency Service had been seeking to disqualify the non-executive directors of Carillion too, on the grounds that they did not know the alleged true financial position of Carillion, but it discontinued those disqualification proceedings in 2023 (see our blog post here).
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
