ANGLO IRISH Bank has taken legal action in London to identify the sender of an e-mail which, it claims, sent a false rumour that Merrill Lynch had withdrawn a $2 billion credit line from the bank.
Anglo Irish has filed a complaint in the High Court claiming that an employee of London stockbroking firm Mirabaud Securities sent an e-mail on February 29th that said: "Anglo-Irish, ML pull a $2bln credit line? Rumor." The Irish bank is trying to find out who sent and received the e-mail.
Anglo Irish has been the subject of numerous false rumours about its funding and liquidity in recent months. The Irish Financial Services Regulatory Authority is still investigating unusual trading and false rumours about the bank following the collapse of its share price on St Patrick's Day.
Anglo Irish has threatened other legal actions over rumours about its financial position. However, the bank and the financial regulator have recently indicated that the false rumours have stopped.
The bank issued proceedings against Mirabaud, which is part of a private Swiss banking group, in April, after regulators in Britain and Ireland said they were investigating potential market abuse by traders manipulating share prices through the spreading of false rumours.
Anglo Irish has asked for a court-ordered copy of communications between the source of the e-mail, Mirabaud, and any third party between February 25th and March 7th. The bank's share price fluctuated over that 12-day period, at one point falling more than 8 per cent during trading on March 6th.
The shares fell 1.4 per cent from €9.20 on February 25th to €9.07 on March 7th. Anglo's share price has fallen 38 per cent this year.
Anglo Irish said in its legal claim that the e-mail was "untrue and defamatory". Merrill Lynch is not accused of any wrongdoing by the bank.
It is understood that Mirabaud is co-operating with Anglo Irish and is helping the Irish bank identify the source and recipient of the e-mail. However, Anglo Irish is using disclosure procedures through the High Court in London to find the source and recipient of the e-mail, as it will protect Mirabaud from further legal actions that may arise from any disclosures it makes.
Anglo Irish has a copy of the e-mail, but Mirabaud has refused to disclose the identify of the e-mail's sender, according to the the bank's claim, prompting Anglo's legal action.
The financial regulator launched an investigation into unusual trading and "false and misleading rumours" about Anglo Irish following share activity on March 17th when the bank's share price fell 23 per cent during trading. Anglo ended the day down 15 per cent. The rescue of US bank Bear Stearns, announced the previous Friday, sparked frenetic trading in bank stocks.
Anglo Irish lost further value in the following two days before its share price recovered on March 20th after the UK financial regulator said it was investigating suspicious trading in bank stocks following the exceptional share volatility.
A spokeswoman for the financial regulator said its investigation into the unusual share trading in mid-March was "ongoing". A number of Dublin stockbroking firms have sent details on their share trading in Anglo Irish at that time to the regulator, which is still examining hundreds of thousands of transactions in Irish stocks.
The investigation is focusing in particular on short-selling, a normal type of stock market transaction, which is essentially a bet on a share price falling in value.
The regulator is trying to find out if rumours were spread by short-sellers who subsequently profited when the share prices fell.
