Christopher Willford, the Finance Director of Bradford & Bingley in 2008, has been fined £30,000 by the Financial Conduct Authority (FCA) for “failing to provide the board with up-to-date information about B&B’s financial position” ahead of the right issue in May of that year.
The FCA state that Mr Willford “failed to identify and investigate potentially material risks, or alert the board, at a crucial time for the firm. Bad mortgage debts, arrears and repossessions had all risen while the net interest margin was falling, so profit forecasts for the year were likely to fall short.
If you read the details of their report (available from here: http://www.fca.org.uk/news/former-b-and-b-group-finance-director-fined), you find out however that the FCA tempered their penalty due to the wider financial crisis at the time, the absence of the CEO (on sick leave), the fact it did not justify a trading update and probably did not contribute to the relative “failure” of the rights issue which was mostly left with the underwriters. Bradford & Bingley was nationalised soon after of course even though it had a strong balance sheet in comparison with other banks as a result of the rights issue.
One has to ask why it has taken over 5 years to issue this notice by the FCA? It is of course very convenient that any legal action relating to the rights issue has probably timed out after 5 years and one firm of lawyers had been pursuing a claim based on the prospectus not presenting a fair view of the position of the company. The information contained in the report might have been very helpful to them.