Wednesday 20 September 2017

Ex-Bloxham partners sued over injured man's funds

Family concerned man's money was 'unduly depleted'

Bloxham liquidator Kieran Wallace of KPMG
Bloxham liquidator Kieran Wallace of KPMG

Gavin McLoughlin and Dearbhail McDonald

Fourteen former partners of Bloxham Stockbrokers are being pursued by the family of a ward of court which is concerned the man's funds were "unduly depleted" under Bloxham's management.

Last month, the mother and sister of the man launched proceedings against the former partners and the Bloxham Stockbrokers Partnership. Wards of court are people judged by a court to be incapable of managing their own financial affairs.

The proceedings were launched after the women, members of the committee that manages the man's estate, secured permission from the High Court to bring legal action against the liquidated firm and its former partners.

It is understood the ward's family are seeking an order requiring the former Bloxham partners to account for their dealings with the funds lodged in court on behalf of the man.

They are also seeking an order directing an inquiry into Bloxham's dealings with the man's fund and want to be provided with supporting documentation, it is understood.

Bloxham was appointed to manage his funds in 2002 after he received substantial damages following a personal injuries action.

The brokerage was liquidated in 2012 after the Central Bank discovered a €5.3m hole in its accounts.

KPMG's Kieran Wallace was appointed as the liquidator.

The named defendants include Tadhg Gunnell, Bloxham's former head of finance. He was disqualified from management of a regulated financial firm for 10 years by the Central Bank in 2015.

Efforts to contact Gunnell were unsuccessful. Wallace did not respond to a request for comment.

Bloxham was the country's oldest stockbroker and the third-biggest at the time of its demise on foot of accounting irregularities which saw Gunnell immediately suspended when the problems were brought to light.

As well as being disqualified, Gunnell was also fined €105,000, but as he was made bankrupt, the fine was waived.

The Central Bank found that Gunnell oversaw "certain financial irregularities" in the firm's accounts that "contributed to its overstated regulatory capital position".

His actions related to the misrepresentation of Bloxham's true capital position to the Central Bank between December 2007 and May 2012, it said.

Wallace was appointed to Bloxham in 2012 after it was found to be undercapitalised with no prospect of an improvement in its position. The collapse put Bloxham's auditors Deloitte in the spotlight and sparked a number of legal actions.

Former Bloxham partner Niall Tinney was sued by Danske Bank, which was seeking repayment of a loan connected to a Bloxham restructuring. Tinney swore an affidavit in which he said Kieran Wallace had been "surprised" that Deloitte had failed to spot Bloxham's financial issues.

"Mr Wallace and a Mr Shaun Murphy were of the opinion that 'while the initial fraud of Mr Gunnell was well hidden in the accounts, subsequent acts of fraud by Mr Gunnell were quite obvious, and they were surprised Deloitte had not identified them'," Mr Justice McDermott quoted Tinney's affidavit as saying.

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