THE FINANCIAL Services Authority (FSA) has fined and banned two former finance directors of Cattles and its subsidiary Welcome Financial Services for publishing misleading information to investors.
The City watchdog banned John Corr and Peter Miller – former finance directors of Cattles and Welcome Financial Services respectively – from performing any functions in relation to any FSA regulated activities as a result of publishing misleading information about the credit quality of Welcome’s loan book and acting without integrity in discharging their responsibilities.
In addition, Corr has been fined £400,000 and Miller has been fined £200,000.
The FSA said that Cattles’ 2007 annual report contained “highly misleading arrears, impairment and profit figures”. Cattles stated that only £900m of Welcome’s approximately £3bn loan book was in arrears, when if accounting standards had been properly applied the correct figure would have been around £1.5bn.
Cattles also announced a pre-tax profit of £165.2m for 2007, but if accounting standards had been correctly applied Cattles would have suffered a pre-tax loss of £96.5m.
The misleading figures from the annual report were also included in a rights issue prospectus that Cattles released to potential investors in April 2008.
“The consequences for shareholders of the misleading statements issued by Cattles and Welcome have been devastating. These directors failed to act with integrity in discharging their responsibilities. They failed in their obligations to shareholders, the wider market and the regulator,” said Tracey McDermott, the FSA’s acting director of enforcement and financial crime.
The FSA has also publicly censured Cattles and Welcome for publishing misleading information.
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