FCA secures confiscation order against convicted CFO
Summary
On 2 November, Southwark Crown Court imposed a Confiscation Order of £355,369 on Timothy Coleman, former Chief Financial Officer of Redcentric Plc. This follows Coleman’s conviction in February last year on charges of false accounting and making misleading statements to the market, for which he is already serving a five-and-a-half-year sentence.
AIM-listed IT service provider Redcentric issued false and misleading unaudited interim results in November 2015, and false and misleading audited final year results in June 2016. Both statements materially overstated Redcentric’s cash position, by £13.1m and £12.2m respectively, and consequently downplayed its debt. Shareholders suffered losses when Redcentric’s true position was revealed.
Coleman had inflated the cash position presented to the Redcentric Board and 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. These false statements meant that Redcentric’s share price was inflated, so that investors paid more for shares than they were worth.
The £355,369 confiscation order reflects the value of Coleman’s financial benefit from these offences. The Court imposed a default prison sentence of three and a half years. This means that, unless Coleman satisfies the terms of the confiscation order within one month, he will be liable to serve this further term in addition to the sentence he is already serving.
The Court also ordered Coleman to pay £119,630 in prosecution costs.
FCA joint executive director of enforcement and market oversight Steve Smart said ‘As CFO of a public company, Mr. Coleman was supposed to uphold the highest standards of integrity on which his shareholders depended. By misleading the market, he caused serious harm to those people. This order sends a signal to anyone who misleads the market that they will be liable to pay - even when they’re behind bars.’
Links: https://www.fca.org.uk/news/press-releases/confiscation-order-against-convicted-cfo