Former UK regulator to review Davy structures following bond-dealing scandal

HQ: Davy stockbrokers in Dublin. Photo: Niall Carson/PA Wire

March 16 2021 07:02 PM

Davy has tapped a team led by Paul Sharma, a former deputy head of the UK’s Prudential Regulation Authority, to carry out an external review of the circumstances behind its headline-grabbing €4.13m fine from the Central Bank of Ireland.

The scandal, stemming from a 2014 bond deal, has already seen Davy CEO Brian McKiernan, former CEO Kyran McLaughlin and the firm’s head of bonds Barry Nangle depart and the stockbroker itself put up for sale through Rothschild.

Davy’s interim CEO Bernard Byrne said the stockbroker has now appointed Alvarez & Marsal to review “matters arising from the Central Bank of Ireland Settlement on March 2”.

Alvarez & Marsal is probably best known in Ireland for its role in stress testing the banks in the wake of the bust here more than a decade ago.

The head of its Irish arm, Tom McAleese, sits on the board of the Strategic Banking Corporation of Ireland (SBCI).

However, the Davy review will be carried out by a UK-based team led by Paul Sharma, managing director with Alvarez & Marsal Financial Services in London and head of the regulatory practice. Before joining Alvarez & Marsal, Mr Sharma was a senior executive with the Bank of England.

Alvarez & Marsal has had no known prior connection with Davy, Davy said.

“The review will include a forensic assessment, the scope of which will be determined by Alvarez & Marsal, of relevant staff trading from 2014 to 2021 and of any other relevant activity.

"It will also assess the adequacy of enhanced compliance, controls and governance designed to prevent conflicts of interest,” Davy said.

It said the Davy board is committed to sharing the findings of the independent review.