Goodbody Stockbrokers under investigation for alleged market-abuse systems failings

Goodbody Stockbrokers is subject to a Central Bank of Ireland (CBI) enforcement investigation into alleged regulatory breaches for failing to have effective systems in place to spot and report potential suspicious client trades.

The disclosure was contained in the latest annual financial statement for the firm’s parent, Goodbody Holdings Unlimited, which was filed with the Companies Registration Office (CRO) this week.

“In January 2022, the CBI notified the group of its decision to commence an investigation into an alleged prescribed contravention ... of the Market Abuse Regulations (MAR),” Goodbody said in the report. “This alleged contravention relates to those obligations of MAR that require investment firms to establish and maintain effective arrangements, systems and procedures to detect and report suspicious orders and transactions.”

The firm added that as of the date when the accounts were signed off on, in early July, there had been no findings that laws had been breached by Goodbody or its officers. A spokesman for Goodbody and a spokeswoman for the Central Bank declined to comment on the matter.

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Separately, the report shows that Goodbody made €2.68 million in so-called “other payments” to directors last year, lifting total directors’ remuneration to €4.68 million, at a time when the firm was taken over by AIB.

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The additional sum is understood to relate to exit-pay arrangements for the company’s two former top executives, Roy Barrett and Brian O’Kelly, as they stepped down ahead of the completion of the €138 million sale of the business in September 2021. Kerry-based financial services group Fexco was the controlling shareholder in Goodbody before the AIB deal.

The payments are in addition to the €10.6 million that Mr Barrett received from AIB for his 7.7 per cent stake in the stockbroking firm, which he had led for 25 years. Mr O’Kelly received €4.5 million for his shares.

Stephen Donovan, who retired from his position as head of investment banking at Goodbody last month, after 26 years with the company, received €2.3 million for his stock as part of the AIB deal. Sources said that Goodbody is in talks to hire an external candidate to succeed Mr Donovan.

Goodbody recorded a €3.18 million pretax profit last year, down from €5.51 million for 2020, according to the accounts. Earnings were driven in both years mainly by trading income from the firm’s own investments in securities.

While Goodbody’s revenues from customer contracts – mainly comprised of fees and commissions – rose 12.7 per cent last year to €75.9 million, its administrative expenses grew at a slightly faster pace, to €77.3 million.

The firm, now led by chief executive Martin Tormey, told staff last month that it is on track to make a loss this year, amid volatility on stock markets, a slump in capital market deals, and a decline in the value of wealth management assets managed for clients. Goodbody employs about 300 staff.