WANdisco is the subject of a UK Financial Conduct Authority (FCA) investigation into regulatory statements it made earlier this year that potentially misled investors by over-egging the sales pipeline.
The FCA says these statements may have materially misstated WANdisco’s financial position. The company already admitted in March: “The Board now expects that anticipated fy22 revenue could be as low as $9 million and not $24 million as previously reported. In addition, the Company has no confidence in its announced fy22 bookings expectations.”
All this stems from WANDisco’s discovery that sales of its live data replication software could have been majorly over-represented by potentially fraudulent sales reporting from a senior sales employee. It suspended its share trading on the AIM market, hired interim chairman Ken Lever and brought in a forensic accounting firm, FRP Advisory, to look over its books. CEO Dave Richards and CFO Erik Miller resigned earlier this month. Lever then became the interim CEO and hired a new CFO, Ijoma Maluza.
Now the company is trying to work out what its true bookings and revenues are for 2022, as well as establishing its cash position. But customers are not fleeing as two contract renewals indicated last week.
A WANdisco statement said: “The Board is co-operating with the FCA in this endeavour, in addition to continuing to support the completion of the independent investigation already being undertaken by FRP Advisory.”
The FCA can prosecute criminal offences and impose fines on misbehaving companies as well as individuals. It fined Barclays Bank £284 million ($354 million) in 2015 over its foreign exchange activities and TSB £29.7 million ($37 million) last year for a disaster of an IT migration project. Individual penalties ranged from £43,000 ($56,000) to £483,000 ($602,000) in 2022.