The financial services watchdog has contacted WPP to check if it is in breach of laws relating to insider information regarding the amount of company money that Sir Martin Sorrell is alleged to have misused.
The WPP board has closed down the investigation into Sorrell as part of his deal to leave the company he founded 33 years ago, and has told shareholders the “allegations do not involve amounts that are material to WPP”.
Sorrell described the allegations as “financial impropriety by me, specifically as to the use of company funds”.
The 73-year old has unreservedly denied misconduct allegations, and WPP’s board has said it would not be publishing the outcome of an independent law firm’s investigations into them.
The Financial Conduct Authority does not directly regulate companies that are not in the financial services industry, but it does have a duty to monitor the behaviour of publicly listed companies to make sure they comply with market abuse regulations.
It has questioned WPP to make sure its announcement about Sorrell meets disclosure and transparency requirements, specifically that the sums of money are not large enough to be classified as a breach of insider information rules. A breach would be not disclosing information that might have a material impact on WPP’s share price.
“It is the responsibility of a listed company to ensure that they identify potential inside information and take steps to disclose it appropriately to the market,” an FCA spokesman aid. “The FCA routinely contacts firms or their advisers to clarify press commentary, announcements and events and did so in this case.”
The FCA would not comment on whether its approach to WPP could lead to further investigation.
The top WPP executive tasked with keeping the business running after Sorrell’s abrupt departure said on Thursday that a break-up of the marketing services giant made no sense.
WPP moved to immediately name Mark Read, seen by many as the leading internal candidate to take over as chief executive, as joint chief operating officer to steady the ship following Sorrell’s resignation on Saturday night.
The global chief executive of Wunderman and WPP Digital, who has previously served on the company’s board, sent an email to the company’s 200,000 global workforce to try to calm nerves about the uncertain future WPP faces.
“There’s been speculation about breaking up the group,” Read said. “We don’t believe this makes sense. In a world where clients need faster, more agile, integrated solutions, we need to get closer together, not further apart. There’s a huge amount of support and goodwill for the company, and no shortage of confidence about the future.”
Read is running the business day-to-day alongside WPP’s senior executive for Europe, Andrew Scott.
The Sky chief executive, Jeremy Darroch, tipped as a well-qualified contender to take over from Sorrell, ruled himself out of the running on Thursday.
