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FCA secures criminal convictions against former directors of Redcentric Plc

Posted on 15 February 2022

In June 2020, we reported on an action the Financial Conduct Authority (FCA) had taken against Redcentric PLC, following findings that the company had published false and misleading accounts in 2015 and 2016. The accounts had materially overstated the company's cash position and misstated its net debt position. 

As we reported at the time, the FCA had taken the unusual step of issuing a public censure against Redcentric without the imposition of a financial penalty. In doing so, the FCA took into account that, under new management, Redcentric had compensated shareholders who had suffered loss and fully cooperated with the FCA investigation. The FCA also took into account the fact that Redcentric's customers included numerous NHS Trusts and that it provided vital services in respect of COVID. The FCA therefore noted that a penalty would give rise to a "significant risk" of disruption to Redcentric's business, which might impact these services, and that it would be better for Redcentric to provide compensation to affected shareholders rather than also paying a penalty.

Any idea that the Redcentric outcome reflected a softening of the FCA's approach to enforcement was dispelled following the criminal conviction of two former employees of Redcentric. On 11 February 2022 Timothy Coleman, its former Chief Financial Officer, was found guilty of 4 charges concerning the making of false and misleading statements to the market. At an earlier stage in proceedings, Estelle Croft, a former Finance Director, had pleaded guilty to charges of making false statements and false accounting and making false statements to statutory auditors, PwC. A third defendant, Fraser Fisher, the former Chief Executive Officer was acquitted by the jury of all charges.

The FCA reported that Ms Croft had falsified key accounting records to inflate Redcentric's cash position, and accepted that she was involved in the making of the false statements. Mr Coleman further inflated those figures for financial reports that were then presented to the Board. Ms Croft and Mr Coleman knew that the market was misled when the statements were published.

Mr Coleman also used the falsified accounts to persuade key investors not to sell down their investment in the company. Ms Croft provided auditors with falsified bank statements and bank reconciliations. Later, when the issue began to be discovered, Mr Coleman suggested to a member of the Redcentric Board that the misstated position could be washed through a potential new acquisition.


Redcentric is a further example of the FCA increasingly using criminal powers where those powers are available, and where the behaviour of the subjects are at the most serious end of the scale of misbehaviour.

The FCA's approach in this case is to be commended. Any fine which the FCA could have imposed on Redcentric would only have hurt innocent stakeholders of Redcentric, including those shareholders not entitled to compensation for failures attributable to Mr Coleman and Ms Croft. Nevertheless, by bringing criminal proceedings against those directly responsible for what the FCA described as "appalling misconduct", the FCA has maintained a strong stand in support of clean equity markets.

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