Davy board hears of staff ire over bond deal
Politicians press Central Bank to hold individuals to account over trading scandal
The Central Bank is facing political pressure to hold individuals accountable for a bond deal that saw a record fine levied on Davy stockbrokers. Photograph: Gareth Chaney/Collins
Directors at Davy looking to draw a line under the trading scandal behind a €4.1 million fine have heard accounts of staff anger over the deal involved as well as the firm’s handling of the fallout.
The non-executive members of the board, led by chairman John Corrigan, asked senior officials within the firm not involved in the bond trade to seek the views of employees among Davy’s 700-strong workforce, after commencing a detailed review of the regulator’s findings and promising on Wednesday to take “appropriate action”.
Sources say that there is a strong level of frustration at various levels of the organisation after the Central Bank revealed on Tuesday that 16 members of staff, including top executives, had sought to make a profit by taking the other side of a bond deal involving a client in 2014 – without telling him or the firm’s compliance team.
Source say that there was a flurry of meetings and discussions at the brokerage on Friday, as the firm sought to chart a way to draw a line under the matter.
It came as the Central Bank faces political pressure from the Opposition to hold individuals accountable for the deal involving executives from Davy which landed the stockbroker with the record fine this week.
In separate letters to the governor of the Central Bank, Social Democrats co-leader Róisín Shortall and Sinn Féin finance spokesman Pearse Doherty asked that Gabriel Makhlouf examine a series of questions about the deal.
Mr Doherty said that, notwithstanding the absence of a senior executive accountability regime in Ireland, it is “essential . . . that individuals are held accountable for their actions, given the serious regulatory breaches that have been found to have taken place”.
He noted the Davy statement on March 3rd that it was “satisfied the issues that occurred in 2014 could not recur”. However, his view was that “despite Davy’s self-satisfaction, no one can be satisfied that the events that occurred in 2014 did not or could not recur, nor should an internal review of the findings be accepted as satisfactory”.
Ms Shortall posed a series of questions for the governor, including whether he intends to publicly name all 16 individuals concerned, and whether any contact had been raised by the Central Bank with the Office of the Director of Corporate Enforcement regarding the bond deal.
She also asked for the Central Bank’s view on “whether it is appropriate” that Davy “effectively runs the Irish Stock Exchange”. She asked that any agreement reached between the broker and the regulator be published in full.
Mr Doherty asked for a wider review of transactions and account dealing undertaken by Davy and its employees since 2014, and “further investigations regarding the individuals involved in the transaction that took place in 2014”, with regards to the Markets in Financial Instruments Directive (MiFID) and the Market Abuse Regime.
He argued that while the fine brought against Davy is the largest of its kind, “this will do little to hold a single individual to account”.
A spokesman for Davy did not respond to a request for comment on the content of the letters.