Davy was fined a record €4.1m by the Central Bank of Ireland and the stockbroker was sold to Bank of Ireland
A group of former employees of Davy stockbrokers made €9m from the onward sale of bonds they’d sold in 2014 on behalf of businessman Patrick Kearney, their counsel told the High Court.
Lawyers for the 16 former Davy employees, who are being sued individually alongside the stockbroking firm, said there was no need to disclose certain information sought regarding the profits as they have already admitted this figure in correspondence with Mr Kearney.
In his proceedings, Mr Kearney, a Belfast-based property developer, and his firm Kilmona Holdings say Davy and 16 former employees and senior management made a windfall profit of some €25m from the onward bond sale.
He claims Davy, while acting as his agent in the sale to what he was assured was a third party, had in fact sold them to a consortium comprising 16 Davy staff members, known as the O’Connell Partnership.
The court heard the claims are fully denied.
At the High Court on Wednesday, Marcus Dowling SC, with Stephen Byrne BL, representing 15 of the 16 former employees, said the group collectively made a profit of some €9m from the onward sale. Counsel for the 16th employee agreed.
A suggestion the plaintiffs cannot trust this figure is “completely groundless”, as it is a “truthful number”, said Mr Dowling. He was arguing against his client being required to disclose to the plaintiffs what his side say are irrelevant and unnecessary materials.
Further, Mr Dowling said it was an “ironic twist” that Mr Kearney was claiming now that he did not know who purchased the bonds.
In his action Mr Kearney claims he learned about the alleged concealment of the partnership composition after Davy was last year fined a record €4.1m by the Central Bank for breaches due to its failure to identify whether a conflict of interest existed in the transaction.
However, Mr Dowling said Mr Kearney’s lawyer wrote to the Central Bank in March 2014 complaining the people on the other side of the transaction were either Davy clients, Davy itself or Davy employees.
Martin Hayden SC, for Mr Kearney and Kilmona, said his clients have been consistent in making a distinction between knowledge about the lenders and knowledge about the bond purchasers.
The plaintiffs are seeking to prove fraud, deceit and breach of fiduciary duty. The defendants say the firm owed no fiduciary duty to Mr Kearney and Kilmona because they were “execution-only” clients.