By Padraic Halpin
DUBLIN (Reuters) – Davy Stockbrokers is under close regulatory scrutiny after a “day of reckoning” when it was fined a record 4.1 million euro ($4.9 million), a top Irish central bank official said.
Ireland’s largest stockbroker was fined last week after an inquiry into 16 of its staff who the regulator alleged sought to profit in 2014 by taking the opposite side of a bond deal with a client, without telling the client or compliance officials.
The 16 included Davy’s then chief executive, Brian McKiernan, who quit on Saturday alongside two senior executives.
Davy closed its bond desk on Monday after it was dropped as a primary dealer in Irish government bonds and said it deeply regretted the shortcomings that emerged and apologised unreservedly and unequivocally for the failures.
“The enforcement investigation has certainly caused a day of reckoning for Davys with respect to their governance, conduct and culture,” Irish Central Bank Director General, Financial Conduct, Derville Rowland, told a parliamentary committee.
Davy is a household name in Ireland, where it is also the largest wealth management firm and a corporate broker for most of the largest publicly listed firms. The bond inquiry has caused public outcry in a country where the actions of some bankers during the financial crisis a decade ago are still raw.
“In terms of our very intrusive supervision, Davy themselves has confirmed there has already been significant change in respect to their governance, risk management, compliance and controls,” Rowland said.
Asked if any matters in relation to its investigation had been referred to the police or Ireland’s corporate watchdog, Rowland said the central bank did not form the view during the case that there was a suspicion of criminal activity.
Now that the full details are in the public domain, the regulator has already had tentative engagement with some other agencies and that the matters with Davy were “very much a live supervisory matter” for the central bank, she said.
“We are engaged in very dynamic and significant regulatory engagement with Davy’s and it is a very evolving situation. I can’t be drawn on commenting on future regulatory actions against individuals,” Rowland added.
(Reporting by Padraic Halpin; Editing by Alexander Smith)