Wandisco shares suspended as tech group flags potential internal fraud

Wandisco has slashed revenue expectations and requested its shares be suspended after unearthing ‘significant, sophisticated and potentially fraudulent irregularities’ in its sales data.

The cloud data specialist, which just last week revealed plans to list its shares in the US in a bid to attract a higher valuation, told investors on Thursday the ‘irregularities’ give rise to a potential material mis-statement of its financial position.

Wandisco could now post sales as low as $9million £(7.6million), around 60 per cent lower than previous forecasts of $24million, and the group now ‘has no confidence’ in its full-year bookings expectations, it said.

Shares in cloud data firm Wandisco have been suspended as potential fraud uncovered 

The group is now conducting an investigation with external legal and professional advisers into ‘the nature of this activity and its true financial position’, Wandisco said, and has requested its shares be suspended from trading on AIM in the meantime.

Wandisco said: ‘Following investigations undertaken by the CFO and CEO, and as reported to the board of directors of the company, significant, sophisticated and potentially fraudulent irregularities with regard to received purchase orders and related revenue and bookings, as represented by one senior sales employee, have been discovered.

‘These irregularities give rise to a potential material mis-statement of the company’s financial position.

‘The identification of these irregularities will significantly impact the company’s cash position and lead to a material uncertainty regarding its overall financial position and significant going concern issues.’

Wandisco shares, which are now suspended, were sitting at 1,324.4p at last night’s close – reflecting growth of more than 360 per cent over one year. 

Victoria Scholar, head of investment at Interactive Investor: ‘These potentially fraudulent irregularities represented by one senior sale employee could be a financial disaster for Wandisco.

‘It has already highlighted that sales could be less than half of its prior expectation and its financial outlook has been questioned. At the request of the company, shares trading on AIM have been temporarily suspended while an investigation with external legal and professional advisers is underway.

‘After an impressive share price performance since the start of the year, up 43 per cent, this black swan event has the potential to sharply derail its bullish trajectory and result in a significant negative rerating to the stock’s valuation, depending on the outcome of the findings.

The company, which has headquarters both in Sheffield and San Ramon, California, and is listed on London’s junior market, confirmed last week it is in ‘the early stages of proactively’ exploring an additional US listing.

It followed shortly after cold shoulders were offered to the London markets by Arm and CRH, sparking concerns about the capital’s waning capacity to attract big business.

Wandisco operates across the world, but its biggest market by revenue is North America.

Wandisco shares , which are now suspended, were sitting at 1,324.4p at last night’s close – reflecting growth of more than 360 per cent over one year.

This post first appeared on Dailymail.co.uk