Concerns about the corporate governance arrangements of AIM quoted companies will no doubt raise their head again after the public censure of Blue Oar Securities, the AIM Nominated Advisor  (NOMAD) that last week changed its name to Astaire Securities.

Blue Oar has been fined £225,000 by the London Stock Exchange for its handling of Worthington Nicholls Group plc (now trading as Managed Support Services plc) in the period between June 6, 2006 and June 29, 2007.

AIM's Disciplinary Committee's uncovered a long list of shortcomings behalf of Blue Oar which led to exaggerated and misleading statements from the company about its prospects. The censure highlights four key shortcomings: 

• failure to assess adequately the Company’s appropriateness for AIM prior to admission;
• failure to carry out appropriate due diligence and to advise the Company properly regarding certain disclosures at admission;
•  failure to advise the Company properly in respect of certain announcements after admission;and
•  failure on one occasion to liaise appropriately with the Exchange

 The committee also said that the NOMAD failed to prevent announcements by Worthington Nicholls it knew were inaccurate or misleading. These included reference to a "high percentage of recurring revenue" when orders received in October 2006 fell from £932,077 to £164,580, and referrence to growth at two acquisitions as having "exceeded expectations" when performance was actually worse year-on-year.

Several recommendations were made by auditors to the company, notably the appointment of a full-time finance director and the use of appropriate accounting software, were not implemented until many months after the float; Blue Oar did not take appropriate steps to ensure they were acted upon more quickly. In December 2007, following a lengthy accounting investigation, Worthington Nicholls said asset writedowns would be more than double what it had been expecting. Last week the company said in its preliminary results that it was issuing a formal claim against HW Corporate Finance LLP and HWCA Ltd, its auditors until November 2007. The company is claiming £25m on the alleged grounds that the profits were overstated in the prospectus.

Blue Oar's fine is the second largest levied by AIM since the introduction of its NOMAD rule book in February 2007, Nabarro Wells was £250,000 in October 2007 for due diligence failures.

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