FCA abandons case against iSoft directors

The trial of three men accused of misleading investors in an IT company that was founded in Birmingham has collapsed for a second time.

The Financial Conduct Authority (FCA) has decided not to pursue a second retrial of Stephen Graham, Timothy Whiston and John Whelan, formerly of iSoft, who had been accused of lying to the market about revenue.

The FCA will also not be pursuing the prosecution of former chairman Patrick Cryne, who did not stand trial due to ill health.

It decided not to push for a third after a jury was dismissed over a procedural problem relating to a missing file.

Tracey McDermott, director of enforcement and financial crime at the FCA, said: “This is of course a disappointing outcome. The problems that have arisen in this case result from a particularly unusual set of circumstances, which are unlikely to recur. As with all our cases, win or lose, we will look to see what lessons can be learned for the future. In the meantime, we continue to focus our energy on the strong pipeline of cases we have under investigation.”

The former directors were charged with conspiring to make misleading financial statements between October 2003 and July 2006 following a seven-year investigation by the FCA.

A central allegation in the case was that the firm counted revenue from a £42.8 million software contract with the Irish health service as early as November 2003, although the deal was not confirmed until 2005.

The first four-month trial ended in a hung jury last August. Then the three-month retrial collapsed earlier this month when the jury was discharged, with the reason for this being covered by a reporting restriction. Not guilty verdicts have been recorded and the defendants received an order for costs.

Martin Wheatley, chief executive of the FCA, said: “This decision not to seek a second retrial does not undermine our determination to bring and prosecute difficult cases. The FCA will continue to use our enforcement powers as one of the ways that we bring about a change in the culture of firms that operate in the UK markets.”