Watchdog investigates outsourcer Interserve
The group has been referred to the FCA’s enforcement division.
Shares in Interserve dipped on Friday after it emerged that the troubled outsourcer is being investigated by the City watchdog over its handling of inside information.
The group said in a stock market update that it has been referred to the Financial Conduct Authority’s (FCA) enforcement division.
It relates to the company’s “handling of inside information and its market disclosures” in relation to the way Interserve exited its “energy from waste” business in 2016 and 2017.
The company will co-operate fully with the investigation and will update the market on the outcome in due course Interserve
“The company will co-operate fully with the investigation and will update the market on the outcome in due course,” Interserve said.
Shares rocketed when Interserve first announced the disposal of its waste-to-energy unit in 2016, but then collapsed when it revealed a jump in costs linked to the exit just months later.
Interserve stock was down 5% on Friday morning.
The probe comes after Interserve last month fell deeper into the red, with chairman Glyn Baker bemoaning “self-inflicted mistakes of the past”.
The group saw losses more than double to £244.4 million in 2017, which compares with a £94.1 million loss in 2016.
Interserve has endured a tumultuous period that has seen the company warn over profits and seek emergency financing.
The firm was hit by disappointing trading in July and August, and in October warned over profits and a potential breach of its banking covenants as it grappled with escalating staff costs, squeezed margins and a flagging performance from its justice business.
Fears had risen that the fallout from the collapse of fellow outsourcer Carillion could engulf the sector.
Interserve holds several government contracts and employs 80,000 people.
It is responsible for British military bases in Gibraltar and the Falklands and holds several contracts with local authorities, London Underground and for Whitehall offices.