Inquiry into suspicious trades making progress, says financial regulator

THE FINANCIAL regulator is conducting a trawl of hundreds of thousands of share trades as part of its investigation into suspicious trading in the shares of Irish banks, it said yesterday

Patrick Neary, the chief executive of the Irish Financial Services Regulatory Authority, said the investigation into unusual trading patterns connected to the spreading of false rumours about Anglo Irish Bank and other stocks was making progress, but would take time to complete.

The financial regulator receives 300,000 transaction reports a week from the Irish Stock Exchange and the London Stock Exchange.

It is analysing trades from the period around March 17th this year, when a series of false rumours connected to the stability of Anglo Irish Bank prompted a 15 per cent one-day fall in its share price.

"There is a huge amount to wade through," Mr Neary said. "We have to marry the trades with other records, so there is a lot of ground to cover."

The regulator is also awaiting the outcome of the UK Financial Services Authority's parallel investigation into unusual movements in the share prices of British banks, accompanied by short-selling, during the same week.

Mr Neary said he would not "pre-judge" the investigation's outcome, but further action would be taken if it identified breaches of market abuse laws.

The "crescendo" of rumours had calmed down, he added.

"It is just not acceptable that rumours and misinformation can have a strong impact on profitable and well-managed financial institutions. We can't have their reputation called into question by malicious rumours," he said.

The regulator conducted more than 500 onsite inspections of financial companies in 2007, according to its annual review, which was published yesterday.

The number of warning notices issued by the regulator to financial services firms under the Consumer Credit Act doubled last year, while the number of cases relating to misleading advertising jumped from 84 in 2006 to 133 last year.