Thirteen members of ‘Davy 16’ named in High Court
Developer takes action against firm and named employees over 2014 bond deal
Davy has claimed that developer Patrick Kearney lawsuit is ‘entirely opportunistic’. Photograph: Gareth Chaney/Collins
Thirteen of the members of the Davy-16 group of employees who were involved in a 2014 Anglo Irish Bank bond trade at the heart of a Central Bank fine and reprimand for the firm in March were named in the High Court on Monday.
The 13 have been joined as defendants alongside Davy in a case taken by Belfast developer Patrick Kearney, who was on the other side of the trade. Mr Kearney is suing for for damages and aggravated damages, alleging fraudulent misrepresentation, concealment and breach of contract.
He has also alleged that Davy made a windfall profit of about €25 million, and deprived him and his company of the best price when it sold the bond on his behalf.
The 13 named by Mr Justice David Barniville in court on Monday include: former Davy chief executives Tony Garry and Brian McKiernan, former deputy chairman Kyran McLaughlin, former head of institutional equities David Smith, and former head of fixed income Barry Nangle.
A hearing the potential joining of the other three members of the so-called Davy 16, or O’Connell Partnership, is set to take place next month.
Breach of rules
The Central Bank fined Davy €4.13 million in March for breaching market rules in relation to the 2014 transaction, saying the firm failed to inform its own compliance department about the deal and also did not carry out an assessment of whether a conflict of interest arose.
Davy’s head of client engagement Tom Potter told the court in an affidavit that while Mr Kearney has claimed the firm acted as his adviser and agent in relation to the 2014 bond trade, the developer had said in a letter to Davy’s chairman, John Corrigan, in February 2016 that neither he nor his company, Kilmona Holdings, “had an advisory or fiduciary relationship with Davy”.
Mr Potter noted that Mr Kearney had alleged that he was not aware of the identity of the members of the so-called O’Connell Partnership. However, he said that a letter from the developer’s financial adviser at the time of the transaction, Tom Browne of LeBruin Private, confirmed in April 2015 to Davy employee Tony O’Connor that “Paddy Kearney was fully aware” that a group of the stockbrokers’ employees in the O’Connell Partnership were involved.
Davy has claimed Mr Kearney’s lawsuit is “entirely opportunistic” and that the matter was settled in 2016 on foot of a previous case taken by the developer.