Relief for Cirata after FCA closes investigation
Cirata execs have breathed a sigh of relief after the financial regulator closed a two-year investigation into the software firm, drawing a line under the dramatic events that caused the firm’s stock to plummet.
In March 2023, Cirata – or Wandisco, as it was then known – revealed it had massively overstated its sales figures, a move which triggered an investigation by the Financial Conduct Authority (FCA).
Wandisco saw its shares collapse from a high of £13 to just a few pennies overnight. Execs at the board quit, and the company changed its name to Cirata, with former Sage boss Stephen Kelly brought in as the new chief executive in a bid to rescue the business.
The FCA today said it had closed its investigation and would not be taking any further action.
Kelly said: “The new management team tasked with rescuing the company from the brink after the dark days of March 2023, have worked tirelessly to build a company that the UK tech sector can be proud of.
“The announcement today heralds one sad chapter closed and a new chapter beginning.”
Cirata shares rose 1.8 per cent per cent to 20p. The stock is down 15 per cent since the start of the year.
‘Major fraud’
The Sheffield-based business, which prior to the misstatement was eyeing a US listing for its shares, in 2023 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” after sales booked by an employee appeared to have been inflated in what it called “significant, sophisticated and potentially fraudulent irregularities.”
The company brought in Ken Lever, who until recently was chair of waste management business Biffa, to become the firm’s interim chair as well as run its fraud investigation alongside non-exec director Peter Lees and audit committee chair Karl Monaghan.
Wandisco’s own investigation had confirmed that its previously published purchase orders and sales bookings for 2022 were false. Revenue for the year should have been $9.7m rather than $24m, and bookings should have been $11.4m rather than $127 m.