Ireland’s oldest stock broking firm has collapsed – with the Central Bank set to interview Tadhg Gunnell, one of the financial partners at Bloxham Stockbrokers.
Irish banking’s governing body is to investigate alleged financial irregularities at the company discovered just last week.
Bloxham was ordered to close on Monday by the Central Bank after the discovery.
The company, the third largest in the state, said its financial partner was immediately suspended.
A report in the Irish Times states that income at the firm had been overstated for several years, dating back to 2007.
The paper says the Central Bank will seek to question 36-year-old accountant Gunnell who joined Bloxham in 2000 and became financial partner of the firm in 2005.
He is to be quizzed about the reporting and accounting of the firm’s income.
Their initial investigations have revealed that the income was overstated in four of the last five years. The report states that no client funds are involved in the irregularities or are affected.
A statement from the governing body said: “The Central Bank will continue its own investigation into the financial irregularities.”
The Irish Times also reveals that the discovery has wiped out the capital reserves held by Bloxham to protect the clients and creditors of the firm.
Bloxham had to hold at least $8million in reserve under rules set by the Central Bank, which regulates stockbrokers, to hold a broker licence.
A statement from the stockbroker said. “The remaining partners in the firm, who were unaware of these issues, have asked a firm of forensic accountants to verify the position and assist in further investigations.”
Over the weekend rival firm Davy agreed to buy Bloxham’s asset management business and complete its purchase of the firm’s private client business, a transaction that had been agreed in March.
Bloxham had almost $900million in private client accounts belonging to 17,000 customers and managed a further billion million of assets, which will now transfer to Davy.
“All client funds are completely intact and safe,” the firm said. “These funds will be unaffected by the transfer.”
Davy is paying less than $10million for the two businesses, which is likely to go towards Bloxham’s large debts built up in the expansion of the firm in recent years according to the paper.
It states that any financial shortfall left will have to be paid by the seven individual partners, including Gunnell, as the unlimited status of the partnership leaves them personally liable. Insurance company FBD, owns 12 per cent of the stockbroking firm as the eighth partner.
Bloxham is already facing costly legal actions in London over claims of more than $25 million from investors in European bonds that were virtually wiped out in value.
Bloxham dates back more than 150 years and was one of the seven owners of the Irish Stock Exchange but its membership of the market was suspended after it ceased trading.
Ireland’s Minister for Enterprise Richard Bruton told the paper he is surprised at what had been uncovered at Bloxham.
“Further questions will have to be directed to the Central Bank as to what has happened here and how it can be prevented,” he said.