THE country's stockbrokers, who manage billions of euro for wealthy clients, are being subjected to an unprecedented investigation by a senior financial watchdog, the Irish Independent can reveal.
And Bloxham Stockbrokers yesterday became the first casualty of the intense scrutiny by the Central Bank investigator.
The probe found that the firm had been cooking the books since 2007. Officials believe Bloxham pretended to have more money than it had, and continued to trade when Central Bank rules say it should have closed.
Officials do not believe money has been stolen from clients.
In an eventful day it was confirmed that:
- Hundreds of millions of euro held by Bloxham had been put at risk.
- Up to 50 people will lose their jobs.
- The businessmen behind Bloxham Stockbrokers could face an uncertain future.
- A senior partner at the firm, Tadhg Gunnell, was suspended.
The Central Bank probe first uncovered problems at the IFSC-based firm early last week.
No client funds are involved or at risk, according to the firm.
However, there are now serious questions over the role of auditors Deloitte.
And the larger probe into all the country's stockbrokers will continue for months.
Bloxham, one of the seven brokers that owns the Stock Exchange, was banned from trading yesterday.
One of its profitable elements was sold to rival Davy stockbrokers in a fire sale after a weekend of intense negotiations between the two brokers.
The final stages of a deal to sell another unit -- which manages Bloxham's 17,000 wealthy private clients -- to Davy was brought forward, and has also been completed.
Bloxham said regulators are investigating the "reporting and accounting of the firm's income, which was overstated over a number of years".
The partners have asked for a firm of "forensic accountants to verify the position and assist in further investigations", Bloxham added.
Seamus Murphy of KPMG is one of those examining the situation.
The special Central Bank probe into Bloxham's activities will attempt to discover whether the irregularities are the fault of a single person or several executives.
The probe will also look into the role of Deloitte which audited Bloxham's accounts. The partners have also begun an internal inquiry. Bloxham is an unlimited partnership which means the partners are responsible for losses.
The firm is currently facing court cases over its role in selling a specific type of bond -- known as a Saturn bond -- to investors which could leave the partners facing a bill of €20m.
Finance Minister Michael Noonan said yesterday that while client funds did not appear at risk "there are other considerations which make it essential for the Central Bank to prevent Bloxham's from trading further".
Bloxham said the firm's financial partner has been suspended but did not identify him.
The company's website names Tadhg Gunnell as the finance and compliance partner.
The Jaguar-driving Gunnell is a 36-year-old accountant who joined the firm in 2000 from Deloitte where he was a manager in audit and assurance.
Bloxham had previously agreed in April to transfer its private-client operations to Davy Stockbrokers by June 6.
Yesterday, after a feverish weekend of negotiations, Bloxham and Davy announced that both the private client business (which looks after the private trades of 17,000 individual customers) and asset management arm (which looks after pension fund investments and the like) were being sold to Davy for a small sum believed to be in the region of €6.5m.
Davy now has an extra €1.2bn of assets under management.
Somewhere between 30 and 50 of Bloxham's 70 staff are expected to lose their jobs.