Top Irish Securities Firm Shuts Bond Desk as Scandal Ripples On
(Bloomberg) -- Ireland’s top securities firm closed its bond desk and said all those involved in a deal which has plunged the company into controversy have now exited, as it sought to draw a line under the worst scandal to hit Dublin’s stockbroking community in decades.
Four staff were made redundant by the closure, Davy said. The move comes after a central bank investigation prompted the nation’s debt office to strip the firm its role as a primary dealer in government bonds on Monday.
The company didn’t identity the workers affected or say how many of them were involved the deal which has rocked Davy.
“Following the decision none of the individuals involved in the 2014 transaction are working in Davy,” it said in a statement late Monday.
Chief Executive Officer Brian McKiernan resigned over the weekend along with deputy chairman Kyran McLaughlin and head of bonds Barry Nangle. Davy was fined 4.13 million euros ($4.9 million) by the regulator. The case involved a consortium of employees buying bonds from a client in a personal capacity, the central bank said, without the customer knowing they were the buyers.
The incident created an “elevated risk of investor detriment,” a central bank official will tell lawmakers on Tuesday.
“Davy prioritised facilitating an opportunity for a consortium of 16 employees to make personal financial gain over ensuring that it was complying with its regulatory obligations,” Derville Rowland, director general for financial conduct, will tell lawmakers according to a copy of her remarks seen by Bloomberg News.
“The transaction highlighted a weak internal control framework in relation to conflicts of interest management and personal account dealing,” she will say.
The reprimand and fine imposed on Davy reflects the serious regulatory breaches and aggravating factors in the investigation, including the firm’s lack of candour when first reporting the matter to the central bank, Rowland will say.
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