Subject of Enforcement: Former Redcentric CFO sentenced to five and a half years imprisonment
Date of Notice: 03/03/22
Overview: Former Redcentric Plc CFO, Tim Coleman, was sentenced to five and a half years imprisonment and disqualified from being a director for ten years having been found guilty of two offences of making false and misleading statements to the market, and three offences of false accounting.
Redcentric, an IT service provider and AIM-listed company, issued false and misleading unaudited interim results in November 2015, and false and misleading audited final year results in June 2016. Both materially overstated Redcentric’s cash position – by £13.1m and £12.2m respectively – and consequently misstated its net debt position by the same amount each time. When the true position was revealed, shareholders suffered immediate losses in the value of their shares.
Mr Coleman had inflated the cash position that was presented to the Redcentric Board, and had used the same false figures to assure key investors about Redcentric’s financial position, persuading them not to sell down their investment in the company. As a result of the false statements, the share price of Redcentric shares was artificially inflated, which meant that investors paid more to purchase shares than they were actually worth.
In sentencing Mr Coleman, HHJ Beddoe remarked:
‘Your offending was persistent, significant and substantial, abusing an exceptional degree of trust. Your actions have damaged Redcentric plc and also public confidence in the City.
‘A CFO of a public company – of any company – is expected to demonstrate the highest standards of integrity. It is the bedrock upon which a company, its directors and its shareholders are entirely dependent. When people such as you are found to have failed seriously they must expect severe punishment.’
Mark Steward, Executive Director of Enforcement and Market Oversight at the FCA, said:
‘The crimes Mr Coleman and Ms Croft committed were serious and caused harm to investors. The sentence handed down today reflects the seriousness of the crimes and should serve as a deterrent to anyone considering committing similar offences. We will now pursue confiscation proceedings against Mr Coleman.’
Estelle Croft, a former finance director at Redcentric, had previously been sentenced to three years’ imprisonment having pleaded guilty to charges of making false statements and false accounting. Ms Croft was also ordered to pay £120,346.70 following confiscation proceedings.
Penalty: Five years Imprisonment.
Original Notice: https://www.fca.org.uk/news/press-releases/former-redcentric-cfo-sentenced-five-and-half-years-imprisonment
Subject of Enforcement: Timothy Haywood
Date of Notice: 30/03/22
Overview: FCA fines GAM International Management and former Investment Director Timothy Haywood.
The Financial Conduct Authority (FCA) has fined asset manager GAM International Management Limited (GIML) £9,103,523 for failing to conduct its business with due care and attention and failing to adequately manage conflicts of interest. The FCA has also fined Timothy Haywood, a former Investment Director and Business Unit Head at GIML, £230,037.
GIML failed to manage conflicts of interest arising from three transactions, two of which were linked to Greensill Capital (UK) Ltd where Mr Haywood was the investment manager making investment decisions. Potential incentives were offered which would have provided benefits to GIML or its parent company. Although these were not taken up, they were not dealt with properly by GIML.
Conflict of interest policies were not followed and as a result any potential conflicts were not considered by those who should have been responsible for doing so.
Mr Haywood received gifts and entertainment, including travelling on a Greensill private aircraft, but failed to record them in a timely manner with GIML. Although the FCA did not find evidence that Mr Haywood made investment decisions because of these gifts and entertainment, the fact that conflicts were not properly managed heightened the risk that he may have been incentivised to invest for personal interest.
Both GIML and Mr Haywood agreed to resolve the cases against them at an early stage of the FCA’s investigation and therefore qualified for a 30% discount. Mr Haywood’s fine includes the £22,437 of the value of the gifts and entertainment he did not record in a timely manner.
Mark Steward, Executive Director of Enforcement and Market Oversight at the FCA, said:
‘A robust framework, properly implemented and followed by all staff, is required to manage any conflicts of interest. GIML failed to do this. In an asset manager, this is vital in ensuring decisions are taken for the benefit of the investors. Mr Haywood’s disclosure failings are equally serious ones.
‘The FCA expects asset managers and their staff to be scrupulous in identifying and managing conflicts and their risks. This case should send a clear warning to the market
Penalty: £9,103,523 fine
Original Notice: https://www.fca.org.uk/news/press-releases/fca-fines-gam-international-management-former-investment-director-timothy-haywood