The Irish Financial Services Regulatory Authority has moved to disqualify two directors of Broadstone Fund Management from any management role in the Irish financial services industry for 18 months, following the closure of the hedge fund company four months ago.
The regulator ordered Broadstone to withdraw from the investment business in March after it uncovered serious regulatory issues at the company. At the time, the company's three listed funds on the Irish Stock Exchange had assets of some €15 million. The regulator's direction to cease trading was the first such cessation order on an Irish-domiciled fund manager.
Making public a settlement agreement that marks the closure of its scrutiny of the company, the regulator cited "breaches of regulatory requirements" in its decision to disqualify for 18 months the Broadstone founder Gerry O'Neill and a former director of the company, David Murray. Mr O'Neill was once head of fixed-income trading at ABN-Amro in Dublin.
"The financial regulator has reasonable cause to suspect that breaches of regulatory requirements occurred in relation to Broadstone Fund Management Ltd while Messrs O'Neill and Murray were directors, including questions of adequacy of financial resources, breaches of authorisation requirements and failure to control operational risk," it said.
"Broadstone Fund Management Ltd agreed to seek the revocation of its authorisation. Mr Gerard O'Neill, director, and Mr David Murray, former director, agreed to a disqualification from being persons concerned in the management of a regulated financial service provider regulated in Ireland by the financial regulator for a period of 18 months commencing from the date of the agreement."
In addition, the regulator said that procedures had been put in place to return all money owned by clients of the company or to transfer such funds in accordance with clients' wishes.
"The regulator has confirmed that none of the breaches give rise to a concern in relation to the integrity of Broadstone Fund Management Ltd client money."
The regulator said the matter was now closed. The regulator's power to make disqualifications in this case comes from the the administrative sanctions procedures set out in the Central Bank and Financial Services Authority Act of 2004. The range of possible sanctions includes a caution or reprimand, disqualification and fines up to €5 million in the case of a regulated entity and €500,000 in the case of an individual. The regulator also has the power to publicise adverse findings and sanctions imposed.
In addition to its move against Broadstone Fund Management, the regulator took action in March against an associate company called Harvest Global Asset Management. However, it revoked a direction on that company to cease investment activity immediately after it was sold to its management.
