Financial watchdog opens formal investigation into M&C Saatchi

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

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

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."

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