Omar Oakes
Feb 3, 2020

Financial watchdog opens formal investigation into M&C Saatchi

Financial watchdog was known to be examining agency but formal probe begins proceedings that could lead to prosecution.

M&C Saatchi founders: (clockwise from top left) Saatchi, David Kershaw, Jeremy Sinclair and Bill Muirhead
M&C Saatchi founders: (clockwise from top left) Saatchi, David Kershaw, Jeremy Sinclair and Bill Muirhead

The Financial Conduct Authority has begun an investigation into M&C Saatchi following the accounting scandal that was revealed last year. 

The advertising group has suffered an exodus of senior leadership, including co-founder Maurice Saatchi, after accounting irregularities prompted an £11.6m "adjustment" in the company’s account over two years.

The FCA, the government’s financial watchdog, was known to be examining M&C Saatchi since December 2019, but a formal investigation begins proceedings that could lead to a prosecution.

It is thought that the FCA will begin with a fact-finding mission, which could include demanding documents and speaking to senior employees at the business.

As the investigation proceeds, the FCA will form a view about whether further action is needed, such as a fine or a public censure.

Research analysts Peel Hunt described the investigation as "another setback for 2020", having credited M&C Saatchi for making "good progress" by appointing two strong independent non-executive directors to its board, Gareth Davis and Colin Jones, earlier this week.

M&C Saatchi, a limited company, saw its share price fall 9.5% this morning in early trading. The price fell as low as 93p but has settled to 101p at the time this story was published. 

In a statement to investors, M&C Saatchi said: "The FCA has notified M&C Saatchi plc that it has commenced an investigation following the accounting adjustments announced by the company, most recently on 4 December 2019, and following the completion of an independent forensic review commissioned by the board. The company will co-operate fully with the FCA."

Source:
Campaign UK

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