A two-year investigation by the financial ombudsman into possible insider dealing and market abuse by Connaught executives in the lead up to the social housing contractor’s collapse has been dropped.
The Financial Services Authority had been looking into whether the company’s directors or senior managers broke financial rules.
It came after departing executives at Connaught sold a reported £16.6m in shares in the £600m turnover firm, listed on the FTSE 250, in two years.
The FSA said it conducted “a wide ranging and thorough investigation”, looking into possible insider dealing, failure to maintain adequate systems and ensure accurate information was provided to the market and market abuse.
An FSA spokesman said this week: “The FSA investigated various circumstances surrounding the collapse of the company but has not found sufficient evidence to take action against any director or senior manager of Connaught.”
Connaught collapsed in 2010, leaving 1,400 people redundant and £100m owed to sub contractors, after a period of rapid expansion.
It followed a profit warning to the stock market in June 2010 after a review of the business identified 31 contracts in its social housing division where capital spending would be deferred, hitting revenue by £80 million and profit by £13m.
Chief executive Mark Tincknell left due to ill health and finance director Stephen Hill also announced that he would depart in October.
Later that month, details emerged of a senior manager at Connaught selling more than 85,000 shares at between 305 pence and 322 pence in the weeks prior to the profit warning, which sparked a drop in the firm’s share price.
What the FSA investigated:
Possible Insider Dealing.
Possible breaches of Listing Rules including failure to maintain adequate systems and controls to ensure accurate and complete information was provided to the market (Principle 2)
Possible breaches of Disclosure and Transparency Rules including failure to disclose inside information (DTR2.2.1)
Possible Market Abuse contrary to Section 118(7) and 118(8) of FSMA.