THERE WERE no hidden reasons for “intense and unusual” trading in bank shares, particularly Anglo Irish Bank shares, in the week of March 17th, 2008, an Oireachtas committee has been told.
The governor of the Central Bank, Patrick Honohan, told the committee something of the outcome of an inquiry by the Financial Regulator in the wake of the unusual share trading.
In a letter sent to the committee last week, he recalled how during a recent meeting with the committee, the matter was raised.
Mr Honohan noted how on March 20th, 2008, the regulator announced that he was “concerned that false and misleading rumours circulating in financial markets in recent days are connected to unusual trading patters in Irish shares.” He announced he was examining certain transactions.
In his subsequent annual report, the regulator said he had found no evidence of market abuse, but that his inquiries highlighted the need for investment firms to have in place systems to ensure against the circulation of exaggerated or unlikely rumours.
Mr Honohan said it was a matter of good regulatory practice not to report the outcome of named investigations except where they lead to “penalties or court action or on an anonymised basis”.
“However, the members of the committee may take it that in relation to trading in Anglo’s shares during that period in question, there are no issues of general relevance other than those outlined in relation to the case referred to in the annual report.”
The governor said it was a fair summary of what had occurred to say that although many rumours circulated, the market was not fundamentally dysfunctional and trading reflected real concerns about fundamentals and other matters of legitimate concern to investors.
Anglo’s shares fell by 15 per cent on St Patrick’s Day 2008 as confidence in the bank and Irish banks generally took a battering.
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