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FSA takes action against ex-Cattles directors for misleading investors

Two former directors of sub-prime lender Cattles and its subsidiary Welcome Financial Services have been banned and fined for publishing misleading information to investors about the credit quality of its loan book.

The regulator also found they had acted without integrity in discharging their responsibilities.

James Corr, finance director at Cattles, was fined £400,000 and Peter Miller, finance director at Welcome, was fined £200,000. Both have been banned from performing functions related to FSA regulated activities.

The FSA also banned John Blake, managing director of Welcome, and fined him £100,000 but Blake has referred his case to the Upper Tribunal.

The FSA found that Cattles’ 2007 annual report contained misleading arrears, impairment and profit figures. It stated that only £900m of Welcome’s approximately £3bn loan book was in arrears, but if accounting standards had been properly applied the correct figure would have been around £1.5bn.

Cattles also announced a pre-tax profit of £165.2m for 2007, but correctly applied accounting standards would have shown a pre-tax loss of £96.5m.

The misleading figures from the report were also included in a rights issue prospectus Cattles released to potential investors in April 2008, which was subsequently fully subscribed and raised £200m.

Tracey McDermott, acting director of enforcement and financial crime at the FSA, says: “Directors of listed companies must act with integrity and exercise appropriate diligence when making disclosures to the market.”



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