Financial Conduct Authority
Market abuse - FCA censures AIM-listed company and commences criminal proceedings against three individuals - 26 June 2020
The FCA has published a Final Notice publically censuring Redcentric plc, an AIM-listed IT service provider, for committing market abuse. The FCA found that between 9 November 2015 and 7 November 2016, Redcentric plc issued unaudited interim results and audited final year results which materially misstated its net debt position and overstated its true asset position and that the company knew, or could reasonably have been expected to know, that the information was false or misleading. As a result of the false or misleading information the market price for Redcentric plc shares was artificially inflated and this continued until Redcentric plc issued a corrective statement on 7 November 2016. The FCA estimates the losses to affected shareholders to be approximately £43 million.
Redcentric plc has agreed to initiate a scheme to offer compensation to all affected investors. This is the first time that an AIM-listed company has offered to implement its own scheme to pay compensation to those affected. The FCA has taken into account Redcentric’s approach to compensate affected shareholders, and has decided to impose a public censure rather than a financial penalty.
Separately, the FCA has commenced criminal proceedings against three former employees of Redcentric plc. Each employee is charged with two counts of making a false or misleading statement contrary to section 89(1) of the Financial Services Act 2012. Additionally, one of the individuals will face further charges of four counts of false accounting, one count of making a false or misleading statement to an auditor and one count of fraud by false representation, contrary to section 17(1)(a) of the Theft Act 1968, section 501 of the Companies Act 2006 and sections 1 and 2 of the Fraud Act 2006, respectively. Another of those individuals will face additional charges of four counts of false accounting and seven counts of making a false or misleading statement to an auditor, contrary to section 17(1)(a) of the Theft Act 1968 and section 501 of the Companies Act 2006 respectively. The alleged offending took place between 1 May 2015 and 31 October 2016.
The findings against the firm are separate to the action being taking against the individuals and no assumption should be made that a criminal offence has been committed.
FCA Final Notice publically censuring Redcentric plc for committing market abuse
Press release
Unauthorised pension introducers - FCA succeeds in civil action - 30 June 2020
The FCA has announced that it has succeeded in a civil action before the High Court against two firms, Avacade Limited (in liquidation) and Alexandra Associates (UK) Limited, trading as Avacade Future Solutions (AA) and their directors, Craig Lummis, Lee Lummis and Raymond Fox, for providing pension services to consumers without FCA authorisation. AA entered into creditors’ voluntary liquidation on 6 November 2015.
The FCA alleged that the two companies provided a pension report service and made misleading statements which induced consumers to transfer their pensions into self-invested personal pensions (SIPPs) and then into alternative investments such as rental office space, tree plantations and Brazilian property developments. The High Court found that AA’s activities were unlawful as they had engaged in the regulated activities of arranging and advising on investments, made unapproved financial promotions through their websites, promotional material and telephone calls and made false or misleading statements. The FCA is seeking orders from the High Court prohibiting AA, Craig and Lee Lummis and Raymond Fox from engaging in unauthorised activities in the UK and for determination of the sums that AA and the three individuals should be required to pay by way of restitution for their roles in the unlawful activity.
Press release: FCA succeeds in High Court civil action against unauthorised pension introducers
The Financial Conduct Authority v Avacade Ltd and others [2020] EWHC 1673 (Ch)
Please see the Financial Crime section for an item on the FCA’s imposition of requirements on Wirecard’s authorisation.
