The case involves the sale of bonds in the then defunct Anglo Irish Bank back in 2014. When an investor buys a bond in a company, they’re effectively lending to that company, and are paid interest on this loan.
The broker was approached by a client, Northern property developer Patrick Kearney, to sell these on his behalf.
But rather than sell them into the market, the firm put together a consortium – the O’Connell Partnership comprising 16 Davy staff members – to acquire the bonds.
In effect, the senior staff at the broker sold the bonds to themselves, and did so without notifying the compliance function in Davy, something which is not allowed in stockbroking under EU rules.
Jeez. What set of gombeen men thought they could get away with that?
It’s entirely possible to buy the bonds yourself. It’s an employee owned company – sorta, sorta, a partnership – and they’re allowed to buy for their own book. But you must disclose. Disclose to the client as well as to the other partners in the firm.
“I’ll buy that!” is fine. “No one is to know” isn’t.