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Wednesday 6 December 2023 Dublin: 8°C
Rolling News

Pearse Doherty Davy scandal can't just pass without consequences for the top brass who think they can break the rules

The Sinn Féin TD says the State must cut all ties with Davy Stockbrokers unless individuals are held to account.

ON TUESDAY, THE Central Bank fined Davy Stockbrokers €4.13 million for breaching market rules in a transaction that involved several of its top brass.

Over a decade ago, the Irish people suffered as a result of the reckless behaviour of bankers and high finance, and a political elite that facilitated them every step of the way.

We were told the culture that led to this catastrophe would never be allowed to take root again.

But the rot continues, and we need to cut it out.

That is why it is important that people know who Davy stockbrokers are, what they did, and why we cannot allow these events to pass without serious consequences.

When high finance meets personal greed

Davy is the leading stockbroking firm in the state, dealing in wealth management, capital markets and financial services.

Their clients include some of the biggest companies on the Irish stock exchange, including Bank of Ireland and Permanent TSB; banks that were bailed out by the taxpayer over a decade ago.

They have also been a primary dealer of Irish Government bonds since 1990, part of an exclusive club that plays a crucial role in funding the state and managing its debt.

Prior to the crash, Davy was a big player in the casino capitalism that drove our economy to the brink.

Tuesday’s €4.13 million fine meted out to Davy by the Central Bank centres on a multi-million euro transaction involving a group of its employees. The transaction centred on a developer who wanted to sell corporate bonds he had bought from Anglo Irish Bank years before.

He went to Davy, and paid them to do what they do; sell the bonds to a willing buyer for a profit.

What followed has been described by the Central Bank as a group of employees, including senior executives, prioritising “personal financial gain over ensuring it was complying with its regulatory obligations”.

Instead of selling the bonds on the open market for the client, 16 Davy employees formed a private consortium and bought the bonds for a lower price than could have been available elsewhere.

At no point was the client told that the consortium was made up of the employees, even senior executives, of the very company that was being paid to advise him on the sale.

Sound like a conflict of interest?

A committee of senior members at Davy decided that there was no conflict of interest.

It just so happens that every member of that committee is reported to have been a member of the private consortium involved in the transaction.

Breaching regulations and misleading the regulator

It was this transaction and these activities that resulted in a Central Bank investigation and culminated in Tuesday’s €4.13 million fine.

The findings of the regulator were damning.

It found that Davy acted “recklessly”, “facilitating an opportunity for the consortium to make a financial gain over ensuring that it was complying with its regulatory obligations”.

It then proceeded to mislead the regulator when word got out about its activities.

This was not some group of low-level staff going rogue.

It has been reported that this group included a former CEO, the current CEO, and Davy’s Head of Bonds, who heads a division that is centrally involved in funding the activities of the state and managing its debt.

Only last month Davy was appointed by the NTMA, the agency in charge of funding the Government and managing its debt, as lead managers of a bond sale that raised €5.5 billion for the state.

Their clients include Bank of Ireland and Permanent TSB, banks that we, the taxpayers, are shareholders of.

So, over a decade after the financial crash, what will be the consequences? And who will be held to account? Davy issued an apology and the Central Bank slapped it with a corporate fine.

In the Dáil on Thursday, the Taoiseach claimed this fine would have “an impact on behaviour”. A decade after the financial crash, even after the tracker mortgage scandal, the Taoiseach still doesn’t get it.

A corporate fine will not hold a single individual to account.

More than three years ago the Central Bank called for a Senior Executive Accountability Regime, underpinned by law so that the top brass in the financial industry can be held to account when they break the rules.

It is something we in Sinn Féin have been calling for for years.

Over three years later and the government still has not published the legislation, revealing how low individual accountability is down Fine Gael’s list of priorities.

We need the legislation published immediately so that those at the top of the financial sector can be held accountable for their actions.

Cut all ties with Davy until individuals are held to account

In the meantime, we must use every tool at our disposal to ensure that there are consequences for those who think they can break the rules to line their pockets.

Even those who wear suits.

Unless and until individuals at the top of Davy are held accountable for their actions, the State must cut all ties. We cannot permit any individual or organisation that puts personal gain above the rules to have any involvement in the assets and liabilities of the State.

That means the NTMA, and yes, even those banks in which the State has a stake, must cut loose from Davy until those who broke the rules face consequences.

It is time that those in high finance who break the rules are held to account.

Pearse Doherty is a Donegal TD and Sinn Féin spokesperson on Finance.


Pearse Doherty TD
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