Davy's fined €4m by Central Bank

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Do we know how much the Davy's Partnership paid for the bonds?
Do we know how much profit they made?
Did they have to compensate the client with a €2m payment?
And then pay a €4m fine.

I wonder if they still cleared a profit on the transaction?
 
Brendan Burgess said:
Do we know how much the Davy's Partnership paid for the bonds?
Do we know how much profit they made?
Did they have to compensate the client with a €2m payment?
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It's in the Irish Times Article.

The bonds were sold for 20.25 cent in the euro, realising €5.58 million. ........Kearney claimed in his legal action that the price secured significantly undervalued the bonds. While his case was settled in early 2016 – for a figure understood to be between €2 million and €3 million – the Central Bank was only getting started.
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Brendan Burgess said:
And then pay a €4m fine.

I wonder if they still cleared a profit on the transaction?
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Also in the article:

A spokesman for Davy declined to comment on the size of the settlement or whether it was borne by the firm or the consortium of 16. He also declined to say whether the €4.1 million fine in the firm would ultimately be recouped from individuals or if any of them have been – or will be – sanctioned.
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The bonds were sold for 20.25 cent in the euro, realising €5.58 million. ........Kearney claimed in his legal action that the price secured significantly undervalued the bonds. While his case was settled in early 2016 – for a figure understood to be between €2 million and €3 million – the Central Bank was only getting started.
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That doesn't answer my question exactly.

But is it something like the following?

Davy's paid Kearney €5.6m at 20 cents in the euro.
They sold them for 30 cents in the euro, so the selling price was €8.4
So they made a profit of about €3m on the transaction.
They settled for between €2m and €3m , so that probably accounted for the entire profit that they had made.

So the overall loss was the €4m fine.

Brendan
 
Brendan Burgess said:
That doesn't answer my question exactly.

But is it something like the following?

Davy's paid Kearney €5.6m at 20 cents in the euro.
They sold them for 30 cents in the euro, so the selling price was €8.4
So they made a profit of about €3m on the transaction.
They settled for between €2m and €3m , so that probably accounted for the entire profit that they had made.

So the overall loss was the €4m fine.

Brendan
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But the fine was against Davy, the company. The profit on the transaction was made by individuals. I would presume Davy also paid the court settlement.

Which beggars the question, did the individuals get to keep their profits and get Davy's to pay any fines and settlements as a result of their actions?
 
Brendan Burgess said:
However, it's quite possible that the Central Bank has let the staff involved know that they will not be approved for any further senior positions.

Brendan
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Sure those "staff" are high enough as they are.
The Central Bank itself has become a fangless wolf as regards regulation due to its primary role in stabilizing the economy and assuring liquidity and solvency to the principal components of the financial system.
It's clear that an independent Financial Regulation Bureau is needed - one that is wholly separate from other state bureaux (e.g. Dept of Finance, Central Bank, NTMA, etc) in both its independence of decision, personnel past history, policy, consultational framework and funding.

We can all now see why the Central Bank of Ireland lobbied so hard to obtain control over the financial regulatory functions in the early 2000s.
Back then I felt it so strange to hear any state bureau would publicly lobby via the media and other channels for controlling another state organ whose only value lies in its independence. It wasn't just unseemly like the recent practice of ex-civil servants writing 'frank' memoirs on their times under such-and-such ministers with a few personal observations slung into the mix; it was also completely at odds with the whole purpose of the new bureau. Just goes to show how ministers ignorant of the ABC of macroeconomics can be so easily spooked by a jargon peddler in a grey suit.
 
SBarrett said:
But the fine was against Davy, the company. The profit on the transaction was made by individuals. I would presume Davy also paid the court settlement.

Which beggars the question, did the individuals get to keep their profits and get Davy's to pay any fines and settlements as a result of their actions?
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As things stand, that's my read of the situation - the individuals in the "syndicate" made the profit, but Davy as a seperate legal entity, has incurred the costs.

Notwithstanding the fact that Davy is probably owned by quote a few of the sixteen staff members, its wrong that Davy as a firm, is the only party to suffer the consequences here.

Assuming that Davy as a firm, doesn't dismiss the sixteen individuals (or whatever number of them remain on staff), what else can happen?

I also find myself wondering if we'll see any tightening up of our legislation, as a result of this transaction?
 
trajan said:
The Central Bank itself has become a fangless wolf as regards regulation due to its primary role in stabilizing the economy and assuring liquidity and solvency to the principal components of the financial system.
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Germany has a financial regulator (BaFin) which is completely separate to its central bank. Wirecard still happened.
 
SBarrett said:
But the fine was against Davy, the company. The profit on the transaction was made by individuals. I would presume Davy also paid the court settlement.

Which beggars the question, did the individuals get to keep their profits and get Davy's to pay any fines and settlements as a result of their actions?
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Apparently this is correct. The company paid the fines and settlement and the individual's kept the profit. Nice work if you can get it.
 
RedOnion said:
"Three senior Davy figures have resigned from the financial services firm days after the Central Bank issued it with a €4.13m fine.

CEO Brian McKiernan, deputy chairman Kyran McLaughlin and head of bonds Barry Nangle will leave the company immediately"


Www.independent.ie/business/three-senior-figures-resign-from-davy-after-central-bank-41m-fine-40165544.html
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While good to see, they've only left because the story has now hit the headlines.

The individuals who participated in the transaction still need to be made answer for their actions.
 
I don't get something here.
In 1999 Kyran McLaughlin resigned over this Liechtenstein thing

www.independent.ie

Top broker quits over leaked tax trust files

MILLIONAIRE Kyran McLaughlin last night dramatically quit as joint chief executive of Davy Stockbrokers and resigned from the board over leaked family tax trust files.
www.independent.ie www.independent.ie

But then he apparently seems to have been allowed retain his shareholding in the stockbroking firm. Why, since he was no longer working there and thus not entitled to share in the future growth of the firm, didn't Davy's other shareholders simply buy McLaughlin out ? That is what usually happens in most private companies.

Then when Bank of Ireland sold its 90% stake in J & E Davy back to the broker's management in 2006, we see that McLaughlin re-emerges as an even bigger shareholder and senior executive in the brokerage which he shamed but a few years before . . .

www.independent.ie

BoI to sell Davy back to its management

Leading broker worth ?300m in the surprise MBO deal
www.independent.ie www.independent.ie

It all looks like McLaughlin's resignation from Davy in 1999 was just a very temporary thing in his own mind; and seemingly in the mind of the other seniors at Davy too. It is almost like politics in a way: a grand gesture resignation, a decent interval to spend more time with the family - and for the wider public to lose focus on the past event - and then a triumphant return to the saddle.

Davy is not just another old broker in the Dublin Stock Exchange.
Davy is not just another old market-making broker either.
Davy is the bond broker to the Irish State - the broker who represents us citizens.
A firm employing people who abuse the public trust should have no part in the investment or trading of public funds.
It looks like the CB report on this matter is about as far as this matter will go as regards censure or punishment.
But in my personal opinion, the O'Connell Consortium or whatever they are called should all do hard time in jail for what they have done to the public trust in financial markets in this country.

And the crying need to reform regulatory practices in Irish financial markets has to be addressed.
 
Despite repeated requests, some posters seem to think that they have a right to post defamatory comments.

So I have to close the thread.

Brendan
 
NTMA withdraws J+E Davy authority to act as Primary Dealer



The Board of the National Treasury Management Agency (NTMA) has withdrawn J&E Davy’s authority to act as Primary Dealer in Irish Government bonds with immediate effect.



The Board reached its decision based on its assessment of the very serious findings relating to the firm that were made by the Central Bank of Ireland last week and following engagement with investors in Irish Government debt over recent days.



A primary concern for the NTMA is to maintain the reputation of Ireland as a sovereign issuer in the bond market and the orderly functioning of the market for Irish Government debt. In this context, the NTMA believes that the behaviour described in the Central Bank findings falls substantially short of the standards expected from market counterparties, peers and colleagues in the bond market and is potentially damaging to Ireland’s reputation as a sovereign issuer.
 
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