Former finance directors fined after FCA finds reckless breaches of market rules
The Financial Conduct Authority has fined two former finance directors of Carillion plc for their roles in issuing misleading information to the market during the company’s financial decline.
Richard Adam and Zafar Khan were each found to have been aware of serious financial problems within Carillion’s UK construction business but failed to ensure those issues were reflected accurately in company announcements. The FCA said neither director alerted the board or audit committee, resulting in ineffective oversight at a critical time.
Mr Adam has been fined £232,800, while Mr Khan has been fined £138,900. The penalties were imposed after both men withdrew their challenges to the FCA’s enforcement action.
During their respective tenures as finance directors, Mr Adam and Mr Khan held responsibility for Carillion’s financial reporting procedures, systems and controls. The FCA concluded that those arrangements were inadequate to ensure that contract accounting judgments within the UK construction business were properly made, recorded and reported.
The regulator found that both individuals acted recklessly and were knowingly concerned in breaches committed by Carillion of the Market Abuse Regulation and the Listing Rules. The breaches related to the dissemination of information that gave false or misleading signals to the market about the value of Carillion’s shares.
According to the FCA, Carillion breached Article 15 of the Market Abuse Regulation by publishing information that it ought to have known was misleading. It also breached Listing Rule 1.3.3R by failing to take reasonable care to ensure that market announcements were not misleading or deceptive and did not omit material information.
Further breaches identified included Listing Principle 1, which requires issuers to maintain adequate procedures, systems and controls, and Premium Listing Principle 2, which obliges companies to act with integrity towards shareholders and potential investors.
Steve Smart, joint executive director of enforcement and market oversight at the FCA, said those in senior positions have a duty to ensure markets are kept accurately and adequately informed. He said the action against the two former finance directors demonstrated the FCA’s commitment to preventing market abuse and upholding regulatory standards.
Mr Adam served as finance director of Carillion from April 2007 until 31 December 2016. Mr Khan held the role from 1 January 2017 until September 2017. Both received initial decision notices dated 24 June 2022.
The FCA noted that the findings in the final notices issued to Mr Adam and Mr Khan are the regulator’s own and are not the subject of a judicial determination. Carillion’s former chief executive officer, Richard Howson, has received a decision notice in respect of related matters, which he disputes. His reference to the Upper Tribunal is scheduled to be heard from 16 February 2026.