Central Bank imposes €1.2m fine on stockbroker Goodbody

Central Bank imposes €1.2m fine on stockbroker Goodbody

The Central Bank of Ireland has imposed a €1.225 million fine on Goodbody Stockbrokers for breaching its obligations under EU market abuse rules.

The stockbroker breached its obligations under Article 16(2) of the Market Abuse Regulations (MAR), which requires that firms which professionally arrange or execute transactions establish and maintain effective “arrangements, systems and procedures to detect and report suspicious orders and transactions”.

The Central Bank investigation found that Goodbody failed to put in place an effective trade surveillance framework to monitor, detect and report suspicious orders and transactions in relation to market abuse in the period July 2016 to January 2022, some five-and-a-half years. Goodbody has admitted to the breach.

The appropriate fine was determined to be €1,750,000, reduced by 30 per cent to €1,225,000 by way of a settlement discount.

Seána Cunningham, the Central Bank’s director of enforcement and anti-money laundering, said: “This outcome stresses the importance of effective arrangements, systems and procedures, such as trade surveillance frameworks, within firms that professionally arrange or execute transactions.

“Effective trade surveillance facilitates the submission of high quality Suspicious Transaction Order Reports (STORs) by firms to the Central Bank, which assist in the detection and combatting of market abuse.

“The failings that gave rise to this investigation were first identified by the Central Bank during the course of its supervisory Market Abuse Thematic Review in 2020.

“This investigation found that Goodbody’s trade surveillance did not operate effectively in respect of risk identification, risk monitoring and governance arrangements, which in turn undermined its ability to detect and report suspected market abuse.

“MAR requires firms to take proactive steps to implement and maintain appropriate systems and frameworks to detect and report market abuse. This obligation is further detailed in the Regulatory Technical Standards, which were developed by the European Securities and Markets Authority (ESMA).

“The Central Bank has repeatedly highlighted the importance of compliance with MAR since it came into force, through supervisory engagements, Dear CEO letters and Securities Markets Risk Outlook Reports.

“The Central Bank expects the board and senior management of regulated entities to take full ownership of the governance of market conduct risk. This case serves to highlight the importance the Central Bank places on firms’ abilities to monitor, detect and report suspected market abuse, a critical part of protecting the integrity of financial markets.”

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