Irish regulator spoke to UK counterpart about Anglo deal, court told

Irish body was ‘comfortable’ with transaction, Morgan Stanley executive says

Pat Whelan (51) of Malahide, Dublin; Willie McAteer (63) of Rathgar, Dublin; and  Seán FitzPatrick (65) of Greystones, Co Wicklow, have been charged with 16 counts of providing unlawful financial assistance

Pat Whelan (51) of Malahide, Dublin; Willie McAteer (63) of Rathgar, Dublin; and Seán FitzPatrick (65) of Greystones, Co Wicklow, have been charged with 16 counts of providing unlawful financial assistance

Thu, Mar 6, 2014, 13:39

The Irish financial regulator spoke with the UK financial regulator in advance of a deal to unwind businessman Sean Quinn’s holding in Anglo Irish Bank, the trial of three former directors of the bank was told this morning.

Joel Carter, who was vice president of the global capital market department of Morgan Stanley in July 2008 when the unwind took place, said he was told by his compliance department there had been a call between the English financial regulator and the Irish regulator in relation to the deal. Morgan Stanley was the company that handled the unwind deal.

Mr Carter agreed with Una Ní Raifeartaigh SC, for the prosecution, that the UK regulator was contacted because Anglo had dual listing on both the Irish and UK stock exchange.

He also said a phone call between Morgan Stanley and Con Horan from the Irish financial regulator’s office left him with the impression that Mr Horan was “comfortable” with the unwinding deal.

The deal involved the unwinding of Mr Quinn’s Anglo contracts for difference – investment products based on share value – which by July 2008 involved more than 28 per cent of the bank’s shares and were a cause of concern for the bank.

As part of the deal, the Maple 10 borrowed €45 million each from the bank to buy 1 per cent of the bank’s shares and the Quinns borrowed €170 million to buy almost 15 per cent of the shares.

Seán FitzPatrick (65) of Greystones, Co Wicklow; Willie McAteer (63) of Rathgar, Dublin; and Pat Whelan (51) of Malahide, Dublin, have been charged with 16 counts of providing unlawful financial assistance to 16 individuals in July 2008 to buy shares in the bank, contrary to section 60 of the Companies Act.

Mr Whelan has also been charged with being privy to the fraudulent alteration of loan facility letters to seven individuals. All three men have pleaded not guilty to the charges.

Mr Carter described the unwind plan as a “neat” and “elegant” solution. He told the court the company also felt it would have no market impact and would be “neutral”.

Asked by Ms Ní Raifeartaigh what his understanding was of the rationale behind the deal, he said it was that “possibly the Irish regulator was concerned about the build up of CFDs” and about the “lack of market transparency” and “wanted to find a solution”.

The case continues.