Following criminal proceedings brought by the Financial Conduct Authority (FCA), the former chief financial officer and the former finance director of Redcentric PLC have been convicted of:
- making false or misleading statements, contrary to section 89(1) of the Financial Services Act 2012; and
- false accounting, contrary to section 17(1)(a) of the Theft Act 1968.
The proceedings were brought after Redcentric, an AIM-listed company, issued unaudited interim results in November 2015 and audited final year results in June 2016 which materially misstated its net debt position and overstated its true asset position by the same margin. The misstatement was discovered when the company's audit committee undertook an internal review of its subsequent interim results in November 2016.
The FCA censured Redcentric itself for market abuse in connection with the issue in June 2020 but did not fine the company. This was in part because the company had put in place a scheme to compensate affected purchasers of its shares (see our blog post here).
The former finance director, Ms Croft, was also found guilty of making false or misleading statements to an auditor contrary to section 501 of the Companies Act 2006. Charges were also brought against the former chief executive officer of Redcentric but the jury cleared him on all counts.
Ms Croft, who pleaded guilty in August 2021, was sentenced to three years' imprisonment and ordered to pay over £120,000. Mr Coleman, the former CFO, will be sentenced in March.
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