WANdisco discovers major fraud and asks for its shares to be suspended in shock to the City
WANdisco, the tech company that only days ago was eyeing a US listing for its shares, today asked for them to be suspended in London as it discovered a major fraud that could threaten it as a going concern.
In a shock announcement to the stock exchange, it tore up its guidance for 2022 and said an investigation was under way to identify its “true financial position”.
What it called “significant, sophisticated and potentially fraudulent irregularities” related to revenue booked by “one senior sales employee”. They amounted to “a potential material misstatement of the company’s financial position” and “uncertainty regarding its overall financial position and significant going concern issues”, the statement said.
The problems were identified in initial investigations by its chief executive, David Richards, also one of its founders and chief financial officer, Erik Miller.
The Anglo-American AIM-listed firm slashed its revenue forecast for 2022 to $9 million from $24 million and said it had “no confidence in its announced FY22 bookings expectations,” as it asked for its shares to be suspended from trading.
The request marked a dizzying about-turn in the WAN’s fortunes. coming so soon after it said that it was considering a secondary listing in New York, in a move seen as emblematic of London’s comparative decline as a global trading centre.
A one-time stock-market darling, WAN helps companies move complex data systems to run via cloud computing and helps manage connected devices in the so-called “internet of things”, long-seen as an area of significant potential growth. It is exactly the kind of company courted by politicians keen to establish London as a centre for high tech, cutting edge companies.
There was shock in the City not just at the timing of the announcement, but also at the potential scale of the problems. Victoria Scholar, Head of Investment, interactive investor said they could amount to “a financial disaster” for the firm.
“This black swan event has the potential to sharply derail its bullish trajectory and result in a significant negative rerating,” she added.
Based in Sheffield and San Ramon in California, WAN had a market value in London of around £880 million at the time its shares were suspended at 1310p each. It employs 180 people. Its clients have included Barclays, Daimler, games maker EA and GoDaddy, the US internet domain company.
WAN’s ambitions for an American listing sent its shares to a 12-month high and came hot on the heels of London’s failure to attract the re-listing of stock in multi-billion pound chip designer Arm, business which will go to New York when the Cambridge-based company is sold by its current Japanese owner Softbank.
Today’s dramatic crash in WAN’s fortunes clouds its plans for a dual listing and leaves investors clamouring for answers.