The Financial Conduct Authority has censured Carillion, which is in liquidation, and fined three former executive directors.
But the former executive directors of Carillion have referred their decision notices to the Upper Tribunal where they will each present their case.
The FCA, which published its decision notices, said any findings in the individuals’ notices were therefore provisional and simply reflected the regulator’s belief as to what occurred and how it considers their behaviour should be characterised.
In the three individuals’ decision notices, the FCA has decided to fine former chief executive Richard Howson £397,800, former finance director Richard Adam £318,000 and former finance director Zafar Khan £154,400.
The Upper Tribunal will determine whether to uphold the FCA’s decisions against the three individuals or not and whether there are any other actions that should be taken by the FCA.
Its decision will be made public on its website following a hearing.
FCA executive director of enforcement and market oversight Mark Steward said: “Carillion failed to take reasonable steps to establish and maintain adequate procedures, systems and controls to enable it to comply with its obligations under the listing rules.
“As a result its true financial position remained hidden over many months and the effects of its collapse were aggravated, causing substantial harm to shareholders and creditors.”
Steward added: “This is market abuse, and as damaging to market integrity as insider dealing and manipulation, though not often described in this way. It should be.
“The FCA’s decisions on the three senior individuals whom the FCA alleges were involved in these failures will now be reviewed in the Upper Tribunal.”
The FCA has imposed a public censure on Carillion, rather than a financial penalty, because the company is insolvent and in liquidation.
“Were it not for Carillion’s financial circumstances, the FCA would have imposed a financial penalty of £37,910,000,” the regulator said.
Carillion itself has not sought to challenge the FCA's decision.
In 2020, the FCA blasted "reckless" Carillion and some of its former directors amid concerns they misled investors over the financial performance of the now scandal-embroiled company.
The regulator issued a warning notice in relation to what was once one of the UK government's biggest contractors before it collapsed in 2018.
The warning notice was issued to Carillion and "certain of its former executive directors" over market manipulation claims the FCA alleges took place between 2016 and 2017.
The FCA claimed numerous market announcements made by the company throughout this period were "misleading and did not accurately or fully disclose" the true financial performance of Carillion.
“The announcements did not reflect significant deteriorations in the expected financial performance of Carillion’s UK construction business and the increasing financial risks associated with it,” it said.
In the view of the FCA, Carillion’s systems, procedures and controls “were not sufficiently robust” to ensure that contract accounting judgments made in its UK construction business were appropriately made, recorded and reported internally to the board and the audit committee.