Financial regulators probe Sports Direct over Debenhams bid

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sports direct
// Sports Direct’s latest financial accounts examined by the Financial Conduct Authority
// Regulators investigate Sports Direct’s compliance with rules on inside information
// Company auditor Grant Thornton valued Sports Direct’s stake in Debenhams

Sports Direct has been contacted by The Financial Conduct Authority (FCA) to ask about its disclosure of information surrounding a possible bid for Debenhams last year.

The Financial Reporting Council (FRC) has also queried how the retailer’s auditor, accounting firm Grant Thornton, valued its stake in Debenhams.

The two regulators launched an inquiry into Sports Direct’s financial accounts and compliance with rules on inside information, after concerns were expressed about how Grant Thornton valued its holding in Debenhams, which recently fell into administration.

Sports Direct tycoon Mike Ashley had his 29.7 per cent stake wiped out when Debenhams went into administration last month, after repeated attempts to acquire the department store chain and keep it from completing a refinancing deal with its lenders.

Following Sports Direct’s AGM in September, the the FCA is understood to have raised some questions with the sportswear retailer, and the company was forced to issue a statement saying it did not aim to place a takeover offer for Debenhams, according to The Times.

Sports Direct said its senior independent director, Simon Bentley, had been misunderstood on the situation when he allegedly told the media that the board could combine Debenhams with House of Fraser, the department store which Sports Direct bought out of administration in August last year.

Meanwhile, Grant Thornton was questioned by the FRC on the most recent audit of Sports Directs’ financial results, which could result in a sanction.

The FRC also looked at whether Sports Direct’s stake in Debenhams should have been accounted for as having enough influence over the company.

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