Top Irish Securities Firm Stripped of Dealership in Scandal

Top Irish securities firm Davy was stripped of its primary dealer status after a scandal which cost some of its top executives their jobs, with the nation’s debt office saying its links to the company could damage Ireland’s reputation.

The National Treasury Management Agency withdrew the Dublin-based firm’s authority to act as primary dealer in Irish government bonds with immediate effect. Davy has held the role since the NTMA’s establishment in 1990.

Over the weekend, Davy Chief Executive Officer Brian McKiernan resigned along with deputy chairman Kyran McLaughlin and head of bonds Barry Nangle after regulators accused the company of “provided misleading details” in an investigation into a deal involving 16 staff, including some top executives.

The “behavior described in the central bank findings falls substantially short of the standards expected from market counterparties, peers and colleagues in the bond market and is potentially damaging to Ireland’s reputation as a sovereign issuer,” the debt office said on Monday.

A voice mail and text message to an external spokesman for Davy was not immediately returned.

“I note and support the decision taken today by the board of the NTMA,” Irish Finance Minister Paschal Donohoe said in an emailed statement. “This is the appropriate decision given the recent very serious findings of the Central Bank.”

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. Davy was fined 4.13 million euros ($4.9 million) by the regulator. Pressure has been building on the government to act, with the nation’s main opposition party, Sinn Fein, calling on the state to cut Davy out of state deals while questions continue to linger over the episode.

Davy is at the center of corporate life in Ireland. It was joint bookrunner on a syndicated sale of 5.5 billion euros in state debt in January, after overseeing a 6 billion-euro sale in June. The firm was also global coordinator on the government’s sale of part of its holding in AIB Group Plc in 2017. Davy chairman, John Corrigan, is a former head of the NTMA.

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