The FCAs Carillion Decision Notice

The FCA has just published Decision Notices in relation to Carillion plc (in liquidation) ("Carillion") and three of its former executive directors. The three individuals have referred their respective Decision Notices to the Upper Tribunal where they will each present their case. Any findings in the individuals’ Decision Notices are therefore provisional and reflect the FCA’s belief as to what occurred and how it considers their behaviour should be characterised.  

Carillion did not refer its Decision Notice (the "Carillion Decision Notice") to the Upper Tribunal. The FCA imposed a public censure on Carillion but no financial penalty since it is insolvent and in liquidation. The FCA would otherwise have imposed a fine of over £37 million. 

The FCA considered that Carillion recklessly published announcements in December 2016,  March 2017 and May 2017 that were misleading and did not accurately or fully disclose its true financial performance. In particular, the FCA found that the announcements made misleadingly positive statements about Carillion’s financial performance generally and in particular its UK construction business; they did not reflect significant deteriorations in the expected financial performance of Carillion’s UK construction business and the increasing financial risks associated with it.  

On 10 July 2017, Carillion announced (amongst other things) an expected provision of £845 million as at 30 July 2017. The nature of the required provision surprised many market analysts and Carillion’s share price fell by 70% within three days and it subsequently went into liquidation in January 2018.

In the Carillion Decision Notice, the FCA found that the facts and matters resulted in Carillion committing market abuse contrary to Art. 15 of MAR and breaching Listing Principle 1, LR 1.3.3R and Premium Listing Principle 2.

In the current environment where there may be a widely predicted economic downturn, the Carillion Decision Notice serves as a useful reminder of the need for corporate announcements, in particular around provisioning and financial performance more generally, must be both accurate and timely. Such announcements may very well come under close scrutiny from regulators going forward.

Authors: David Capps and Tom Connor