Elderfield must leave no stone unturned -- and publish findings
BENJAMIN Franklin once said there are only two certainties in life; death and taxes. He could well have added a third: stockbroking irregularities.
Students of the financial markets know that problems regularly crop up at all levels in the stockbroking world. The fabled houses of Wall Street regularly fall foul of the law and it is no different in Dublin or indeed Cork where the 100-year-old W&R Morrogh went wallop 11 years ago and destroyed the savings of hundreds of clients who are still awaiting compensation.
Only a fool would be surprised to discover that new problems have emerged at another blue-blood firm and part owner of the Dublin stock exchange itself.
Breaking the rules is part and parcel of the financial world, what distinguishes the fraud is how the regulators handle it. Most people are aware of the great court cases that periodically make the headlines in other countries.
Here, it is a very different story. Mistakes by financial institutions almost never result in more than a rap of the knuckles. We know this because the Central Bank and the Financial Ombudsman regularly unearth grievous mistakes by financial institutions which leave the public out of pocket.
The companies are sometimes subjected to derisory fines but are rarely named, shamed or jailed. In the case of the Financial Ombudsman, the law specially bans him from naming anybody although this might change soon.
The good news is that the Central Bank under Patrick Honohan and Matthew Elderfield appears to have turned a corner. IFSC institutions have been heavily fined for relatively minor infringements of the rules.
The irregularities at Bloxham were unearthed as part of a much wider probe into the country's stockbrokers which is headed by poacher-turned-game keeper Michael Hudson, a former Merrion Stockbrokers executive.
Mr Elderfield has proved to be a tenacious and successful regulator and there is every reason to believe that his team will get to the bottom of the irregularities reported at Bloxham.
Mr Elderfield should publish his report so that we all know what happened. The report into W&R Morrogh, the last stockbroker to develop really serious problems, was never published.
This cannot be allowed to happen in this case for there are too many unanswered questions.
One of the most troubling questions is the role of Deloitte, which has been auditing Bloxham's books for years. The current auditor of state-owned Anglo Irish appears to have missed the irregularities for the past five years.
Industry sources were also puzzled last night about the role of the Central Bank itself which is responsible for checking the accounts of all stockbrokers on a monthly, six-month and annual basis.
The Central Bank relies on the audited reports produced by Deloitte and others but it is also mandated to look at the internal management accounts and the trades which are sent to the regulator on a daily basis.
While the internal and external probes into the irregularities are at an early stage, the Central Bank will want to understand how Deloitte's auditors failed to spot the warning signs.
The Central Bank will also want to investigate its own failure to spot problems in the numerous reports submitted by Bloxham since 2007. It should break the habit of a lifetime and publish the findings no matter how damning.