FCA Primary Market Bulletin 62: Carillion Enforcement, Manipulative Approaches

Newsletter for primary market participants.

April 2026 / No. 62.

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In this edition, we cover:

• Key aspects of our misleading statements case against Carillion plc.
• Our concerns about potentially manipulative investment approaches.
• Our review of sponsors’ work on the modified transfers process.
• The deadline for commenting on our consultation about proposed clarificatory amendments to the Prospectus Rules: Admission to Trading on a Regulated Market sourcebook (PRM).

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  Primary Market Bulletin 62

• Misleading statements by Carillion plc

  • Final Notices: key findings on misleading disclosures, controls and director conduct
  • Relevant rules

• Manipulative investment approaches: our concerns

  • Due diligence for quoted companies before investment

• Our review of sponsors’ work on the modified transfers process

  • Background
  • Our work
  • Common themes
  • Specific feedback on eligibility to use the modified transfer process
  • Conclusion

• Prospectus Rules consultation

• Primary Market Bulletin

  • See past editions
  • Sign up for Primary Market Bulletin

Newsletter for primary market participants.

April 2026 / No. 62.

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In this edition, we cover:

• Key aspects of our misleading statements case against Carillion plc.
• Our concerns about potentially manipulative investment approaches.
• Our review of sponsors’ work on the modified transfers process.
• The deadline for commenting on our consultation about proposed clarificatory amendments to the Prospectus Rules: Admission to Trading on a Regulated Market sourcebook (PRM).

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Misleading statements by Carillion plc

On 16 February 2026, we imposed a fine of £237,700 on Richard Howson, former group chief executive officer of Carillion plc.

The fine was imposed for acting recklessly and being knowingly concerned in breaches by Carillion of:

• Article 15 of the EU Market Abuse Regulation (MAR) (market manipulation as defined in Article 12(1)(c) of MAR (false or misleading statements)).
• Listing Rule 1.3.3R (misleading information not to be published).
• Listing Principle 1 (procedures, systems and controls).
• Premium Listing Principle 2 (acting with integrity). This followed action against 2 of Carillion’s former group finance directors, who were fined £232,800 and £138,900, respectively. Mr Adam and Mr Khan were found to have acted recklessly and been knowingly concerned in the same breaches by Carillion as Mr Howson.

All 3 of Carillion’s former directors referred our decisions to the Upper Tribunal (Tax and Chancery Chamber), after we issued our respective Decision Notices on 24 June 2022. They have now withdrawn these referrals, and we published the Final Notice involving Carillion plc on 16 February 2026.

As Carillion has been insolvent and in liquidation since 2018, we imposed a public censure on it, rather than a financial penalty. Were it not for Carillion’s financial circumstances, we would have imposed a financial penalty of £37,910,000.

In this article, we describe some key features of our decision in this case, particularly that Carillion and its former directors ought to have known its statements were false or misleading under Article 12(1)(c) of MAR.

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Final Notices: key findings on misleading disclosures, controls and director conduct

Carillion, a premium listed issuer, recklessly published announcements on 7 December 2016, 1 March 2017 and 3 May 2017 that were misleading.

The announcements made misleadingly positive statements about Carillion’s financial performance generally and about its UK construction business, Carillion Construction Services (CCS), in particular. They did not reflect significant deteriorations in the expected financial performance of CCS and the increasing financial risks as a result.

Carillion’s procedures, systems and controls were not sufficient to ensure that contract accounting judgements made within CCS were appropriately made, recorded and reported internally to the Board and the Audit Committee.

We found Messrs Adam, Howson and Khan had acted recklessly and been knowingly concerned in Carillion’s contraventions.

They were each aware of the deteriorating expected financial performance within CCS and the increasing financial risks as a result. They failed to ensure that the Carillion announcements, for which they were responsible, accurately and fully reflected these matters. They failed to make the Board and the Audit Committee aware of the increasing risk, resulting in a lack of proper oversight.

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Relevant rules

The Annex to Carillion’s Final Notice, and Annex A to the Final Notices of each of its former directors, set out the statutory and regulatory provisions relevant to their outcomes.

Annex B to the Final Notices of each of the former directors (which contain detailed summaries of the key representations made by the former directors, which we did not accept, and our conclusions in respect of them) cite other relevant law and guidance.

Of particular note are the following provisions in force at the time of the relevant breaches (EU MAR was onshored into UK law on 31 December 2020 by the European Union (Withdrawal) Act 2018. UK MAR replaced EU MAR from this date.):

Article 12(1)(c) Article 15 Recital 47

Article 12(1)(c)

Article 12(1)(c) of MAR provides that market manipulation comprises ‘disseminating information through the media, including the internet, or by any other means, which gives, or is likely to give, false or misleading signals as to… [amongst other things, the price of a financial instrument], where the person who made the dissemination knew, or ought to have known, that the information was false or misleading’.

Article 15

Article 15 of MAR states: ‘A person shall not engage in or attempt to engage in market manipulation.’

Recital 47

Recital 47 to MAR explains how disseminating false or misleading information, including ‘the invention of manifestly false information… the wilful omission of material facts… [and] the knowingly inaccurate reporting of information’, can harm both investors and issuers.

It goes on to state: ‘It is therefore appropriate not to allow those active in the financial markets to freely express information contrary to their own opinion or better judgement, which they know or should know to be false or misleading, to the detriment of investors and issuers.’

Article 12(1)(c) of MAR

We set out below what we consider to be the key issues relating to the ‘ought to have known’ element of Article 12(1)(c) of MAR that arise from the Final Notices.

We found that the announcements contained statements that were not justified by the facts and matters known to Carillion about the continued deterioration of CCS over the relevant period.

For the reasons set out in paragraphs 5.5 to 5.17 of Carillion’s Final Notice, we considered that Carillion and its former directors (as applicable) ought to have known that the information in the announcements was false or misleading.

By disseminating information that gave false or misleading signals about its share price in circumstances where it ought to have known this information was false or misleading, Carillion committed market manipulation in breach of Article 15 of MAR.

Carillion’s breach of Article 15 is based on the attribution of knowledge of its former directors to Carillion, as a result of which Carillion ought to have known that the announcements were false or misleading.

The test to establish whether Carillion/its former directors ought to have known that this information was false or misleading is an objective one. If a reasonable person in their position ought to have known the information in the announcements gave, or was likely to give, false or misleading signals as to Carillion’s share price, Carillion would commit market manipulation as defined in Article 12(1)(c) of MAR. The knowledge of a company’s directors, as well as other employees or agents, may be attributable to the company for these purposes.

We attributed the knowledge of Mr Howson to Carillion for our finding that Carillion had committed market manipulation as defined in Article 12(1)(c) of MAR for all of the announcements. We did the same for Mr Adam’s knowledge to Carillion for our finding in this regard for the December 2016 announcement, and for Mr Khan to Carillion for our finding in this regard for the March and May 2017 announcements.

Below, we summarise the knowledge of the former directors, and therefore that of Carillion, about the false or misleading information in the announcements.

During the relevant period, there was significant pressure on CCS to meet very challenging financial targets maintained by the former directors in the face of clear warning signs that CCS’s business was deteriorating significantly.

This led to an increasingly large gap between CCS’s internal assessments of its financial performance, and its performance as budgeted and ultimately reported to the market. This gap was bridged by using overly aggressive contract accounting judgements to maintain CCS’s reported revenues and profitability. However, these judgements did not reflect the true financial position or financial risks of CCS’s business.

CCS’s management highlighted the significant and increasing financial risks and exposures from these contract accounting judgements to one or more of the former directors during the relevant period. In particular:

• CCS reported to them on ‘hard risks’ associated with its construction projects (amounts included within budgeted forecasts but which were considered by CCS management unlikely to be recoverable). At the time of the announcements, these hard risks were material.
• CCS reported to them on its potential exposure to contentious amounts due on major projects. The likely exposure to these contentious amounts at the time of the announcements was material, with 11 out of 16 named major projects having a red flag status.
• CCS highlighted to them large and increasing divergences in financial performance on 4 major projects. CCS made clear there was an increasingly large disparity for those projects between the assessments of financial performance by project and/or management teams within CCS and the financial performance as reflected in Carillion’s budgeted forecasts. Partly due to these circumstances, and as per paragraph 5.20 of Carillion’s Final Notice, we considered that Messrs Adam, Howson and Khan (as applicable) were aware that there was a risk that the announcements were false or misleading.

They did not respond appropriately to this risk and failed to take it properly into account when reviewing and approving the announcements as Board members. They also failed to inform the Board and the Audit Committee about these matters for the purpose of their review and approval of the announcements.

Instead, the key information received by the Board and the Audit Committee about CCS’s financial performance (submitted and/or approved by one or more of the former directors), painted a much more optimistic picture than that being internally reported by CCS.

This was despite the fact the former directors must have been aware these matters would be highly relevant to the decision-making of the Board and the Audit Committee. This is particularly the case given the nature and cumulative effect of the information they were given by CCS management. This information highlighted increasing levels of financial risks and exposures from the financial performance of CCS’s construction contracts.

We considered that Messrs Adam, Howson and Khan acted recklessly as a result and attributed the state of mind of the former directors to Carillion in this regard. Carillion’s breach of Article 15 of MAR was therefore committed recklessly.

This outcome, in combination with our findings under Listing Rule 1.3.3R, Listing Principle 1, Premium Listing Principle 2 and the knowing concern of the former directors in Carillion’s breaches underlines the:

• High standard of disclosures expected of listed companies.
• Need to maintain adequate procedures, systems and controls. It also highlights our willingness to hold executives to account for breaches by issuers, underscored by the Financial Reporting Council’s 2024 UK Corporate Governance Code’s introduction of board accountability for effective internal controls at listed companies.

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Manipulative investment approaches: our concerns

We have concerns that UK micro-cap or small-cap issuers are being targeted directly as part of potentially manipulative schemes to affect those issuers’ share prices.

Specifically, we are concerned about an increase in a subset of the following manipulation types:

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Fake investor takeover approaches (share price manipulation)

Schemes where parties pose as genuine investors seeking to make an offer for the entire share capital of the issuer, when the parties involved are in fact not who they claim to be.

These parties may either leak news of the supposed takeover online or push the issuer to disclose the approach to the market, with the aim of increasing the share price so that the parties can profit from the share prices’ movement.

Equity fundraising linked to pump-and-dump schemes

Schemes involving an approach to the issuer about equity fundraisings that involve the issuing of large numbers of warrant instruments.

We have identified several such fundraises that appear to have been carried out shortly before significant upward price movements in the targeted issuer’s share price.

We are concerned those price movements may have been caused by pump and dump schemes involving online advertising that may contain false or misleading information about the issuer. Warrants are then exercised and the shares sold at the increased share price.

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Due diligence for quoted companies before investment

We want to reinforce to directors of quoted companies and their advisers that it is vital to carry out appropriate due diligence on an approach before you engage further with any proposal.

This includes making sure you:

• Clearly understand who the investors are.
• Confirm the investment offer is genuine.
• Review the investors’ track record for any similar deals. We are increasingly using data and technology to identify and review these situations.

We will continue to strengthen our detection capabilities and act accordingly. However, the success of preventing this type of market manipulation in the first place is best achieved by issuers and their advisers identifying potentially suspicious activities at source.

We want every issuer and adviser involved in capital markets to recognise that you are all part of the solution in preventing market abuse, which can harm both the company affected and wider market integrity.

We want the first lines of defence to be as strong as possible.

Strengthening those defences:

• Directly protects issuers from unusual share price movements and from reputational harm which could impact later capital raises.
• Protects investors from potentially significant losses typically associated with pump and dump manipulation.
• Prevents harm to the integrity and appeal of UK markets. If you identify concerns that you may have become the target of such activity, you should report it to us.

Report suspected market abuse.

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Our review of sponsors’ work on the modified transfers process

Background

When introducing the UK Listing Rules, we recognised that sponsors might require ongoing support, particularly in new aspects of their role.  We said we would share wider feedback from our reviews of sponsor services to help sponsors comply with the rules.

This article covers practices we have seen during recent reviews of the modified transfer process covered by UKLR TP2.

We hope our anonymised observations will increase sponsors’ understanding and help them calibrate their approach to modified transfers against observed market practice.

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Our work

In late 2025, we began several reviews of sponsors that had worked on modified transfers into the equity shares (commercial companies) (ESCC) category.

These reviews focused on the nature and extent of the sponsors’ due diligence in supporting the modified transfer declaration.

Our reviews spanned a number of sponsors and a broad variety of transactions and scenarios.

We requested and reviewed key records of these transactions and held meetings to explore in more depth how they approached their work and the bases for their judgements.

We have discussed our observations with these individual sponsors.

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Common themes

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Due diligence determined by context

All the sponsors we reviewed thought carefully about the work they needed to do based on their relationship with the issuer and its recent history. The scope of work undertaken varied materially in practice. This reflects:

• Different issuer risk
• The complexity of the business.
• Knowledge gained as a result of existing, sometimes longstanding advisory and/or broking relationships with the issuer. Sponsors adapted their work to the context to decide why certain information was important. For example, some took account of factors such as how recently the issuer had prepared for listing on the standard listing segment and the issuer’s level of preparedness for premium listing at that time.

They also considered the recency (or otherwise) of prior information and due diligence.

We saw a variety of contrasting approaches, all of which appeared appropriate in the circumstances.

Financial Position and Prospects Procedures (FPPP) report

We observed sponsors both obtaining and not obtaining a new FPPP report for the transfer. We felt both approaches were appropriate in their specific context.

Where sponsors had deep, longstanding relationships with issuers, they relied on this knowledge to justify a more bridging or gap analysis approach, including not requiring a new FPPP report.

In contrast, one sponsor had not had a longstanding relationship with an issuer. This issuer had grown since initial public offering (IPO) and wanted to ensure its systems, procedures and controls would enable it to meet the additional obligations that would apply on ESCC. In this case, a limited scope FPPP report was obtained. This report focused on the issuer’s ability to comply with its additional obligations following the transfer and gave an update on the key findings in the IPO FPPP report.

Where no new FPPP was commissioned, we also observed contrasting but equally appropriate approaches in those particular circumstances.

One sponsor chose not to rely on the IPO FPPP report due to the passage of time and the sponsor’s knowledge of and involvement in transactions/events since the issuer’s IPO.

In another case, a sponsor reviewed the IPO FPPP report to provide a base for further diligence to be undertaken by the deal team. In this case, the sponsor’s enquiries allowed for a more focused management due diligence session and to make further enquiries about whether the issuer had later implemented various recommendations for post-IPO enhancements.

Directors’ understanding

We were pleased to see sponsors following best practice when satisfying themselves that the directors of the issuer understood the additional responsibilities and obligations which would apply to the issuer on ESCC. This best practice is set out in Technical Note TN 718.3

For example, all sponsors started by assessing the directors’ level of understanding by reviewing the nature and extent of each director’s experience of complying with their responsibilities and obligations. They then provided tailored training according to the directors’ needs. For example, during our review we saw evidence of the sponsor’s internal analysis of board experience and the training they would have to provide to meet the obligation set out in TP 2.7.

Sponsors also described to us soft opportunities to recognise board expertise and understanding of their responsibilities and obligations, for example during other routine interactions with individual board members.   This forms an integral part of the sponsors' application of judgement. We appreciate it may be difficult to capture such considerations, but we encourage sponsors to do so. For example, we observed one sponsor referencing this in both the relevant sponsor control schedule and in a memorandum to the relevant governance committee.

Care shown by sponsors

Although sponsors carried out different work, each sponsor came to a reasonable opinion after due and careful enquiry.

We observed that the work undertaken to provide the positive declarations required by TP 2.7 and UKLR 24.3.13 (1)-(3) (as modified by TP 2.9) appeared appropriate, notwithstanding the negative assurance required by TP 2.10.

Each sponsor took steps to understand the new obligations that applied to the issuer when it transferred to the ESCC and to specifically address the ability to meet these in each case. We were reassured to see this.

Sponsor processes and governance

We observed sponsors diligently following their own procedures.

We also observed thoughtful compliance oversight regardless of the sponsor’s individual approach.

Sponsor expertise

We were pleased to see that the transactions we reviewed were well staffed with knowledgeable individuals who exercised judgement around the scale and nature of the work required.

Record keeping

Although the sponsors we reviewed demonstrated different approaches to record keeping, all provided adequate records to demonstrate the work performed and the judgements reached. These records variously included emails, meeting notes, committee memoranda, draft and final documents and control schedules. These records appeared to proportionately record the sponsors’ work.

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Specific feedback on eligibility to use the modified transfer process

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Complying with obligations during the prior 18 months (TP 2.1 R (3))

We recognise it can be complex to determine whether an issuer is eligible to use the modified transfer process, especially when elements of the issuer’s compliance history are not straightforward.

We observed sponsors carefully assessing each issuer’s regulatory track record to understand whether anything constituted a prior breach of the rules.

Our reviews and other work show instances where sponsors were required to consider whether prior matters in an issuer’s Disclosure Guidance and Transparency Rules (DTR) track record constituted compliance as described in TP 2.1 R (3).

In one case, a sponsor reviewed and analysed historical correspondence between an issuer and us. They then applied its judgement to conclude the matters were performed in the ordinary course of business and did not point to any breaches of our rules. In another case, a sponsor identified a technical DTR breach which had been remediated promptly. They then contacted us to confirm its judgement that this did represent non-compliance with its obligations under the listing rules, the disclosure requirements, the transparency rules and the corporate governance rules as envisaged by TP 2.1 R (3). In both cases, we agree with the sponsor’s approach and application of judgement.

Our interactions with sponsors confirmed they recognised that, in cases of uncertainty over TP 2.1 R (3), they could contact us to discuss this further. We support this approach and are happy to take these questions from sponsors.

Negative confirmation (TP 2.10)

The sponsor’s assessment of the issuer’s compliance history also has implications for the negative confirmation in TP 2.10 (‘we have not identified any adverse information that would lead us to conclude that the issuer would not be able to comply with its obligations under the listing rules, the disclosure requirements and the transparency rules’).

Sponsors also appeared to reflect on their assessment of the board’s understanding and willingness to comply with the issuer’s responsibilities and obligations under the UKLRs when making the TP 2.10 confirmation.

No significant change to the business (TP 2.1 R (4))

Sponsors told us they want more clarity on what constitutes a ‘significant change to the business’ under TP 2.1 R (4).

We think it is relevant here for sponsors to consider the purpose of the modified transfer route. This purpose enables a listed issuer to demonstrate it has bridged the gap between (a) the eligibility and continuing requirements for its current listing category (b) the listing category it wishes to join – without having to undertake a full eligibility review.

This is based on the issuer having complied with its obligations (including obligations to announce inside information under the UK Market Abuse Regulation (UK MAR)) for the preceding 18 months. The assumption here is that actual and potential investors will have a good understanding of the issuer’s business.

The rule is designed to ensure that an issuer does not use the modified transfer route when it is currently – or in the last 18 months – undergoing changes to its business which, while falling short of a reverse takeover, are sufficiently significant to make a full eligibility review appropriate.

Our interactions with sponsors in our review confirmed they know they can contact us on a case-by-case basis to discuss the requirements of TP 2.1 R (4) further. We support this approach and are happy to discuss these questions with sponsors.

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Conclusion

We are encouraged to see the modified transfers process being used and sponsors applying their expertise and judgement.

We encourage sponsors on a case-by-case basis to contact us via a guidance request if you are in any doubt about whether an issuer is eligible to use the modified transfer process.

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Prospectus Rules consultation

Reminder: 20 April 2026 is the deadline for commenting on our consultation on proposed clarificatory amendments to the Prospectus Rules: Admission to Trading on a Regulated Market sourcebook (PRM).

On 6 March 2026, in Chapter 5 of Quarterly Consultation Paper 51 (CP26/8), we proposed further clarificatory amendments to PRM.

The proposed changes involve several different aspects of the Public Offers and Admissions to Trading regime.

Specifically, the proposals cover:

• The scope of the exemption from the prospectus requirement for admissions to trading of transferable securities that are offered, allotted, or to be allotted to existing or former directors by their employer.
• The requirements that must be taken into account when publishing final terms that are not included with a base prospectus.
• Presenting content-specific accompanying statements for protected forward-looking statements.
• Using cross-reference lists when submitting draft prospectuses.
• Applying the 3-day rule for prospectuses published in connection with initial public offers.
• When a supplement to a base prospectus can be used to change the terms and conditions and/or the form of final terms.
• When investors must be informed about the possibility of supplemental prospectuses and withdrawal rights. Our proposals aim to clarify certain rules and give proper effect to the policy proposals consulted on in consultation papers, CP24/12 and CP25/2, which were finalised in Policy Statement, PS25/9.

We are keen to hear views on our proposed rule changes.

For further detail on these changes and how to respond to them, please see CP26/8.

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