Courts

Tuesday 29 July 2014

Anglo trial hears evidence on CFDs from economics expert

Donal O'Donovan and Dearbhail McDonald

Published 06/02/2014|13:06

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Pat Whelan. Collins
Willie McAteer. Courtpix
Sean FitzPatrick. Collins

THE trial of three former Anglo executives has heard that the complexity of Contracts for Difference (CFDs) is bounded "only by the imagination of people in financial markets".

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University College of Cork economics lecturer Seamus Coffey, an expert in banking and  government finance, has been explaining the operation of CFDs and the role played by buyers and brokers in the complex, "highly leveraged" financial instruments.

Mr Coffey is the third witness to testify in the trial of Sean FitzPatrick, 65, from Greystones in Co Wicklow, 51-year-old Patrick Whelan of Malahide in Dublin and 63-year-old William McAteer of Rathgar in Dublin.

The men have pleaded not guilty to 16 charges of unlawfully providing financial assistance to individuals for the purpose of buying shares in Anglo Irish Bank in 2008.

Mr Whelan has also denied seven charges of being privy to the fraudulent alteration of a loan facility letter.

Mr Coffey agreed with Michael O'Higgins SC, representing Mr FitzPatrick, that a number of "big players" - including US financial institutions with lending divisions- had "very vivid imaginations".

Mr O'Higgins said some 12pc of Anglo's shares were out on loan in 2008.

Mr Coffey said that in the event of a share price fall, investment banks could engage in a practice known as short selling.

This morning (THRS), the 15 strong jury was shown a graph illustrating the declining share price of Anglo Irish Bank from January 2008 to December 2008, when share prices fell from over €10 to 17c.

The share price was valued at just over €15 at the beginning of 2007.

Former company secretary Natasha Mercer told the court there would normally be up to ten scheduled board meetings a year.

In 2008 there were 33 board meetings, including three on one day in September.

Irish Independent

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