By Tom Winnifrith, The Sheriff of AIM | Wednesday 5 July 2017
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from ShareProphets). I have no business relationship with any company whose stock is mentioned in this article.
Redcentric (RCN) CEO Fraser Fisher is still in place despite his company having admitted to having grossly overstated its 2016 accounts, something that pushed up the shares allowing him to make a killing dumping stock a year ago. The FCA is investigating this matter as are other agencies which almost certainly means the Serious Fraud Office. So far the fall guy has been the ex FD. But I can now demonstrate that Fraser must have been personally aware of at least one major fraud, a type of con the King of the fraudsters, Mr Rob Terry, also pulled off at Quindell and The Innovation Group.
We can thus see that Fisher knew that 2016 results were boosted by fraud yet sold shares on 24 June, 8 days after posting those results - surely his poisution is utterly untenable? Why is he still in situe? Does that not make AIM a farce where a man can be shown to have played a part in a fraud that ramped the share price allowing him to dump stock yet still keep his job which in 2016 saw him trouser £429,000, including a bonus of £150,000 which itself should surely be repaid since it was justified by results that Fraser must have known were bogus?
So what was the Rob Terry inspired fraud? Terry pulled the stunt at Quenron and at his previous fraud, the Innovation Group and it involves pushing the payment of salaries back by just a couple of days but past a period end to overstate cash balances - in the face of a sries of fascist lawyers letters we bravely exposed the King of the Fraudsters for doing this HERE.
Over at Redcentric in its 2017 annual results statement we are told:
The forensic review found that both net assets and net debt as at 31 March 2016 had been materially misstated. The misstatements arose due a combination of wilful misstatement and poor application of basic accounting controls and processes. The investigation did not find any evidence of theft.
The review found that net assets as at 31 March 2016 had been overstated by £14.9m (subsequently revised to £15.8m as per note 28). A number of accounting policies and practices, specifically those in respect of cost accrual, cost deferment and revenue recognition had been incorrectly applied.
Net debt at 31 March 2016 had been understated by £12.5m. The forensic review uncovered misstatements regarding the timing of cash receipts and cash payments. Cash receipts from customers received post year end had been incorrectly recorded as having been received pre year end and cash payments to suppliers pre year end had been incorrectly recorded as being made post year end.
The delayed payments included trade creditors and payroll creditors.
That last line is an en passant reference to payroll creditors, it rather underplays the magnitude and nature of this con. What actually hapened? Redcentric with its 500 highly paid staff has a monthly payroll run of c£2.5 million. It pays staff in the last week of the month and has always done so without fail throughout its entire history. Thus staff can set up direct debits to pay for mortgages, greedy and lazy ex wives who regard alimony as a free meal ticket for life, paying of credit card balances, etc, etc on that basis and not have to worry. But in March 2016 staff were told that there was a glitch with the payroll software. That meant salaries could not be paid in that week as per normal but instead arrived a couple of days late. That is to say in April.
This will have caused considerable issues for at least some staff who may not have had enough cash to cover mortgage or other payments. And so it is just plain inconceivable that an issue that was bound to have pissed off at least some of the company's staff is not one that the CEO, Fraser Fisher, would not have been aware of. Fraser knew.
On that basis if there really was a payroll software glitch he should have ensured that this was flagged up to the auditors and flagged up in 2016 results published on 16 June of that year. He did not. So whether there was a one off software glitch or not - and the smart money says that there was not - the failure to disclose is a fraud and Frazer Fisher knew all about it. 8 days later he exercised 200,000 options at 70p and sold the same number of shares at 180p so making a quick £220,000. That and his salary...lucky boy. But he was only able to make out like a bandit in this way because of the fraud which - in terms of the payroll scam at least, he MUST have known about. The fraudulent numbers pushed the shares ( now 78p) up to 180p to sell.
In light of that, how can the AIM Casino be taken seriously if Nomad Numis allows Fisher to stay in place one day longer?
Never miss a story.
This area of the ShareProphets.com site is for independent financial commentary. These blogs are provided by independent authors via a common carrier platform and do not represent the opinions of ShareProphets.com. ShareProphets.com does not monitor, approve, endorse or exert editorial control over these articles and does not therefore accept responsibility for or make any warranties in connection with or recommend that you or any third party rely on such information. The information available at ShareProphets.com is for your general information and use and is not intended to address your particular requirements. In particular, the information does not constitute any form of advice or recommendation by ShareProphets.com and is not intended to be relied upon by users in making (or refraining from making) any investment decisions.
Comments are turned off for this article.
Search ShareProphets |
Stock market news |
Recent Comments |