From what I can gather the regulator just started asking some pretty probing questions. The partners then came clean on the issue and the regulator gave them several days to either rebuild their capital balances to the required level or sell their assets. The Davy deal was presumably the best Bloxhams could achieve.
I donât think Iâm too upset by the notion of a regulator out there coming down on firms that donât have sufficient capital assets to protect their customers. Ultimately, Bloxhams are the ones who walked themselves into this mess. All customers have been protected and that is the main aim of the regulator to be fair.
Typical, the big boys trying to pin it all on the accountant. Hope Tadhg doesnât go down without a fight.
I know very little of the case and all of my musings are pure speculation but based on my experience of the financial services industry it would have been very difficult for Tadhg to be carrying on this kind of thing alone. Looks like the problem relates to a losses on a trade that were hidden. Also, I canât see any motivation (beyond wanting Bloxham to stay in business) for him to be perpetrating this kind of fraud.
In any reasonably sized financial institution thereâs a segregation of duties between the guys that run the business and make the business decisions and the lads out the back that keep an eye on the debits and credits. Iâd be astonished (and who knows it may turn out to be the case) if Tadhg had the ability to go and execute the trade that was ultimately hidden.
Also, if that was the case and the other partners didnât notice then they need to have serious look at themselves. According to the IT the losses were around âŹ5m, considering Bloxhamâs minimum capital requirements were in the region of âŹ5.8m (and their actual capital canât have been hugely in excess of this given they went bust), if youâre a partner in a business and you miss something like that then youâre really not doing your job.
From the papers it sounds like it was going on a for a few years so there was more than one transaction presumably. In addition to that whoever hid/cooked the figures required someone on the inside. The audits for the years in question did not pick it up either.
From the paper the guy in the headlines worked for the auditiors in a prior existance.
The regulator should have checked the figures as well.
The accounts were incorrect and they sailed past the auditors and regulatorsâŚ
As for pining it on one guy there are three parties to answer: the firm, the auditor and the regulator
So according to the Indo the losses came from prop trading on shares.
According to the article the partners knew nothing, but the accountant covered it up. Hmmmmmm
THE problems at Bloxham Stockbrokers appear to date back to trades made five years ago, when it bet on some of the largest companies on the Dublin stock exchange, sources said yesterday.
The Central Bank and the stock exchange announced on Monday that Bloxham was banned from trading after irregularities were discovered dating back to 2007.
Bloxham confirmed the sale of its private clientsâ business and asset-management arm to [color="#306294"]Davy Stockbrokers early on Monday morning, following a weekend of feverish talks between the two brokers.
Two investigations have been launched. The sale of the private-client business had been agreed in April.
Sources said yesterday that Bloxhamâs problems began in 2007 as the broker bought stocks in Allied Irish Bank, CRH and a handful of other large companies, which then saw their share price collapse as the credit crunch began in the summer of that year and quickly became a full-blown crisis.
The trades, which were completely legitimate, were so-called âunderlying tradesâ. These allow traders to make bets that an underlying stock price will move upwards.
Traders usually set a target price for an expected bull run and use spreads to reduce cost.
It seems that losses mounted as the traders continued to wait for the market to turn â which has still not happened. Irregularities
These trades were made in the hope that the positions could be sold to private clients but they do not appear to have been made on behalf of private clients. The losses were hidden from the partners but they reduced the amount of capital and profit that Bloxham was making.
Stockbrokers at [color="#306294"]Davy struggled to understand what was going on as they pored over Bloxhamâs books last weekend during emergency meetings that allowed Davy to take control of Bloxhamâs profitable private clients and asset-management arms.
While Davyâs experts could not hope to uncover all the irregularities, they needed to be sure that the two units which were being acquired for around âŹ6.5m did not contain any nasty surprises.
The Central Bank plans to interview the financial partner Tadhg Gunnell later this week about the alleged irregularities that led to Bloxhamâs closure.
Mr Gunnell has been suspended from Bloxham but remains a partner. His permission is required for important decisions that affect what remains of the firm, including Mondayâs sale of the private client and asset management arms. Calls to Mr Gunnellâs home in Dublin 7 were not returned yesterday.
Still donât understand the motivation for the Financial Controller or whatever role he had to be covering up trades that he hardly executed himself.
If this was a full on fraud with forged or hidden documents etc then the auditors and partners probably had little chance of uncovering it anyway. But if they had a corporate structure that facilitated a cover-up, or allowed the financial controller to play any role in investment decisions like that, then youâd have to ask questions of the overall governance.
He was obviously involved in the cover up from a numbers perspective, but ya he hardly did it on his own. Especially considering other partners were involved in the Equities side.
Would there be an obligation on him though Rocko as an Accountant to be more âhonestâ than the rest?
As a Partnership they have no obligation to shareholders so the only breech would have been in CB reporting which he would have signed off on.
I doubt he signed off on CB reporting on his own - that would need two signatories, directors normally so not sure how it works in a Partnership. But they certainly have obligations there.
Iâm sure he has his own professional obligations as an accountant and could have been in breach of chartered accountancy bye-laws etc. But nothing that would be particularly more onerous than what youâd expect of anyone in that position.
bloxhams have been in trouble since 2008 with all the hassle with the SMDF and the legal insurance business in this state going to the wallâŚat that time i think they blamed morgan stanleyâŚseems like theyve been on shaky ground ever sinceâŚ