Irregularities see Bloxham close after 150 years

A Central Bank probe that uncovered an overstating of earnings and insufficient capital reserves at Bloxham Stockbrokers has brought 150 years of financial trading to an end at Ireland’s oldest securities firm.

The company confirmed yesterday that inaccurate reporting had been going on for a number of years but it was only last Thursday that Bloxham told the Central Bank it didn’t meet the minimum capital requirement of €5.8m. It is understood the shortfall is between €4m and €5m.

“The impact on the firm is that it that it no longer holds sufficient capital to meet the licensing requirements of the Central Bank to carry on trade as a stockbroker,” a spokesperson for Bloxham said.

Bloxham operated as a private partnership and as such didn’t have to provide accounts publicly to the Companies Registration Office. As a firm operating in a regulated market, Bloxham had to submit its accounts to the Central Bank every year.

The Central Bank relies on independently audited accounts to ensure companies are providing an accurate report of their financial status.

The accountancy firm Deloitte was Bloxham’s independent auditors, but failed to identify the irregularities in the company’s accounts.

Deloitte confirmed it had audited the accounts of Bloxham but refused to comment on any financial irregularities uncovered by the Central Bank.

Bloxham said the first it learned of the irregularities in its own accounts was when the Central Bank had enquired about the company’s ability to meet minimum capital requirements on Thursday of last week.

“The internal issues were discovered by the firm for the first time late last week on foot of an enquiry from the Central Bank,” the company said.

“They relate to the reporting and accounting of the firm’s income which was overstated over a number of years. The financial partner of the firm was immediately suspended and the Central Bank informed.”

The firm’s finance and compliance partner is Tadhg Gunnell, who joined Bloxham in 2000 from Deloitte, where he was a manager in audit and assurance.

The company stressed that the other partners in Bloxham Stockbrokers were unaware that the company was not meeting statutory requirements.

“On foot of their initial investigations, 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,” a spokesperson said.

There has been no mention of a criminal investigation so far. The Central Bank is awaiting the outcome of its own probe before considering proceeding with any further actions.

Davy Stockbrokers has picked up the two profitable portions of Bloxham: The private clients business and the asset management business.

Davy had already agreed to purchase the private client business and it is believed the company paid between €6m and €7.5m.

* Additional reporting Bloomberg