The unprecedented €4.13m fine imposed on stockbroker Davy by the Central Bank for breaching market rules, will have far reaching implications from both a compliance and public trust perspective for the entire industry.
The consternation and anger levelled at Davy from the general public towards such wrongdoing is understandable, given the financial sector and in particular the big players within it, still exude the type of cronyism and arrogance, reminiscent of the Celtic tiger era.
The sophisticated insider dealing which took place, that warranted such a big fine, infers that the “golden circle” is alive and well in Ireland and is dictating the state of play for their own gain.
The sheer disregard for compliance rules by the consortium of 16 Davy employees who benefited, demonstrates an environment where fear of repercussions for such behaviour is non-existent or at the very least limited.
The fallout is still continuing with the expedient resignations tendered along with their carefully worded apologies. It would however be premature for Davy to envisage such crisis management tactics will be sufficient of itself to quell the public uproar or mistrust.
Not only does this entire affair place an unsavoury spotlight on those who retain such privileged positions, but poses the question as to why such flagrant disregard of the rules could occur in the first instance.
Already there has been some political soundbites that these misdeeds are bordering on criminality, which if true, may warrant investigation by An Garda Síochána, rather than just the Central Bank or Office of the Director of Corporate Enforcement (ODEC).
Social Democrats co-leader Róisín Shortall said last week in the Dail “Yet again we see that there are not serious consequences. This amounts to white-collar crime. That is what we are talking about in the main in respect of stockbrokers. The rule of there needing to be consequences for crime applies, especially to white-collar crime.”
White-Collar Crime
White-collar crime in Irish law is difficult to define as it incorporates many illegal acts committed by an individual or a group of individuals to obtain a financial advantage. Such conduct can involve bribery and corruption, money laundering, cyber-crime, insider trading, false accounting and tax fraud.
Traditionally Ireland has had a poor record of dealing effectively with white-collar crime, which left an inability to deter or punish those who perpetrated such acts. For instance, the ODCE, in particular received much scorn after the collapse of the case against former Anglo Irish Bank chairman Sean FitzPatrick, as a result of destroyed evidence by ODCE staff during its investigation.
There is a general acceptance that Ireland needs to up its game considerably when it comes to white-collar crime, as currently the convoluted legal framework is largely not fit for purpose, particularly if one looks at other jurisdictions such as the United States and most of our European neighbours.
There has been some efforts in recent years, particularly by Fine Gael, since the financial crash of 2008 with various measures being announced by former Justice Minister Charlie Flanagan and subsequently his successor Minister Helen McEntee. These policy initiatives ranged from new anti-money laundering and anti-corruption legislation to increased powers for An Garda Síochána and ODCE. Progress however, has been slow with many measures yet to be adopted.
Hence, this latest financial scandal involving Davy is a stark reminder that urgency is required from our legislators to establish a strong legal framework to deter such acts of dishonesty by those in positions of power and for the Government to put in place the necessary resources to enforce it. Otherwise public cynicism could lead to public unrest, where the mantra “one rule for us and another for them” will chime through the streets.
Jason O’ Sullivan, is a Solicitor and Public Affairs Consultant at J.O.S Solicitors
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