The prosecution was brought against three former employees of Redcentric Plc. Following a three month trial at Southwark Crown Court, the former Chief Financial Officer, Tim Coleman, was found guilty of knowingly making false and misleading statements to the market and of false accounting. The former Finance Director, Estelle Croft, pleaded guilty to charges of knowingly making false statements, false accounting, and making false statements to Redcentric’s auditors, PwC.
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. The FCA estimates the losses to affected Redcentric shareholders, to which the misstatements contributed, to be approximately £43m. The FCA publicly censured Redcentric for market abuse on 26 June 2020 in proceedings in which Redcentric agreed to pay compensation to affected investors.
The CFO was sentenced to 5 1/2 years imprisonment, disqualified from being a director for ten years, and confiscation proceedings are ongoing. The FD was sentenced to 3 years, following credit for a guilty plea, and was ordered to pay £120,346.70 in confiscation proceedings.
Merry was led by Paul Ozin QC and Howard Watkinson.
Press coverage here: The Times | FT
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