Carillion under investigation for insider trading, financial watchdog reveals

Carillion is being investigated by the financial watchdog over allegations of insider trading in the stock ahead of the company’s collapse earlier this year.

The Financial Conduct Authority revealed that it is looking into the allegations in a letter to the Work and Pensions Committee chair, Frank Field.

Mr Field had written to the regulator to enquire about the status of its ongoing investigation into the failed outsourcing giant.

The City watchdog is probing the “timeliness and content of the firm’s announcements”, specifically regarding a statement made on 10 July last year, in which the firm issued a profit warning and revealed its chief executive Richard Howson had stepped down. The stock crashed by almost 40 per cent following the announcement.

The FCA is aiming to determine whether the matters referred to in the statement were identified and announced at the “appropriate time”, and is also “considering whether earlier announcements made by Carillion were false or misleading as a result”.

According to the regulator, its investigation currently covers potential breaches of the market abuse regulation, listing rules and listing principles, and allegations of insider trading in Carillion’s shares ahead of the trading update last July.

Mr Field also asked the FCA about a request Carillion made in December last year for “protection from the imposition of fines or penalties by regulators for actions taken by the company before July 2017”. The query was made as part of a general plea for government support before it went bust, and was withdrawn a week later.

The watchdog told the committee chair that it never received the request for immunity, and would only rarely and in “exceptional” cases comply with such an appeal.

Carillion collapsed in January, putting thousands of jobs at risk, following a string of profit warnings as a series of bad contract decisions led to a ballooning debt pile. Since the group went bust, the Business, Energy and Industrial Strategy Committee and Work and Pensions Committee has conducted a joint inquiry into what went wrong, and in a report last month said the failure of Carillion was a “story of recklessness, hubris and greed”.

MPs on the committees said blame lies with the company’s management, its accountants and advisers and regulators, and called on the competition watchdog to look into a potential breakup of the big four auditing firms.

The company’s demise is expected to cost taxpayers £148m in total, the National Audit Office said earlier this month, although it warned that the final cost to the public purse could take years to establish.