The Central Bank has fined Merrion Stockbrokers €65,000, making it the fourth financial services firm to be penalised over failures to report details of regulated market transactions.
Merrion was reprimanded for failing to report 12,020 transactions in next-day reports to the Central Bank between November 2007 and August 2011 and for failing to report correctly whether transactions were ‘buys’ or ‘sells’ on 45,782 transactions between November 2007 and June 2011.
The Central Bank said that the firm had also failed to establish “adequate policies and procedures” that were sufficient comply with the European Communities (Markets in Financial Instrument) Regulations 2007, which are also known as the “MiFID” regulations.
This brings the total penalties imposed by the Central Bank to €275,000 arising from inspections since 2010 into the failure of firms to report financial transactions properly.
The Central Bank conducted an inspection of Merrion in May 2011 in the normal course of supervision and found that six trades may have been incorrectly reported as sales instead of purchases.
Once raised with the firm, Merrion identified that it had reported incorrect buy/sell indicators to the Central Bank on “client principal trades” since November 1st, 2007.
“The breaches were unintended and once detected the firm submitted all transactions reports correctly,” the Central Bank said. Merrion accepted the breaches once discovered and acted swiftly to rectify the situation, cooperating with the investigation and settling at an early stage, the regulator said.
Peter Oakes, director of enforcement at the Central Bank, reminded companies of the timeliness and accuracy of information submitted to the regulator as a priority for enforcement action for this year and that this was essential to the effective monitoring of the market to detect “market abuse and financial crime”.
“The Central Bank’s ability to monitor the markets for market abuse is key to its ability to fulfil the statutory objective of ensuring the proper and effective regulation of financial service providers and markets,” said Mr Oakes.
Firms must understand that “incomplete or inaccurate transaction reporting creates an unacceptable risk to the Central Bank in achieving its statutory objective”, he said.
On previous reporting failures, the Central Bank imposed fines of €100,000 on NCB Stockbrokers in December 2010, €50,000 on J&E Davy, trading as stockbroking firm Davy, on December 8th, 2011 and €60,000 on Susquehanna International Securities later in December 16th, 2011.
The Central Bank found that Merrion had failed to submit by the following working day details of 373 transactions on July 14th, 2010, 327 transactions on October 14th, 2010, 612 transactions on November 23rd, 2010 and 10,708 transactions between November 1st, 2007 and August 26th, 2011.
Further Central Bank inquiries are ongoing into other firms in relation to the failure to report details of financial transactions.
