THE FINANCIAL Regulator has asked each of the stockbroking companies in the Irish market to provide phone recordings and transaction records linked to all of their recent dealings in Anglo Irish Bank shares, writes Arthur Beesley, Senior Business Correspondent.
As the regulator's inquiry into "false and misleading rumours" about the financial position of the bank and other Irish financial institutions gathered pace yesterday, brokers were asked to provide all relevant information about their share trades to its investigators.
The regulator is understood to have requested such information in a series of personal contacts yesterday with the chief executives of most of the Irish stockbroking companies.
While the deadline for the provision of such information is not known, it was speculated in some quarters that investigators might visit individual firms to examine data.
Senior market sources said that certain brokers have already started the process of collating information for the inquiry.
Stockbrokers routinely record the phone conversations of their dealers and analysts.
The fact that such records will be examined indicates that brokers' dealings in the shares of Irish financials will be subjected to a high level of scrutiny in the investigation.
Dealings in Anglo's stock are the primary focus at present, although a number of trades in shares of Irish Life & Permanent are also under examination.
The Irish Stock Exchange is also understood to be involved in an inquiry, it is understood.
The alleged involvement of certain British market participants in the rumours and some particular hedge funds will be examined by Financial Services Authority in London, which is also investigating share trades in the banking giant HBOS.
At issue in some of the investigations is whether investors engaged in "short-selling" on the back of false rumours.
In this practice, an investor borrows stock in a firm, sells it in the hope of buying it back at a lower price later, returns it to the original owner and receives the difference as profit.
After recovering some ground on Thursday immediately after the regulator's intervention was made public, Irish financials gained another 4.56 per cent when the stock market re-opened after the Easter break yesterday.
The biggest gainer was Anglo, which closed up by 11.46 per cent to close at €8.75.
The stock has suffered worst in the sell-off of Irish financials in light of worries about the Irish economy at large and the downturn in the property sector.
Irish Life & Permanent gained 9.07 per cent to close last night at €12.75. AIB gained more than 2 per cent to close at €13.77 and Bank of Ireland finished 1.95 per cent higher at about €10.
Of the Dublin brokers, only Goodbody made reference to the investigation in its morning note yesterday, which referred to Bear Stearns in the US and "rumours" about HBOS.
"The accompanying revelations that unusual trading in bank stocks in the UK was being investigated by the FSA, and similar investigations here by the Financial Regulator, could act to steady trading patterns in the banks for the moment," said analyst Eamonn Hughes.
"We can't help but feel that while volatile trading in the banks certainly creates excitement, in broad terms, property asset prices are still in decline, debt markets are still effectively closed and Thursday's weak consumer data domestically highlights risks to the macro growth outlook."
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