Goodbody Stockbrokers fined over €1.2m by Central Bank over rules breaches

Goodbody failed to identify critical market abuse risks to which it was potentially exposed as a result of its business model and activities.

Goodbody Stockbrokers has been fined over €1.2m by the Central Bank of Ireland for failing to properly implement a framework to monitor and detect suspicious transactions.

Under article 16 (2) of the Market Abuse Regulations, firms that professionally arrange or execute transactions are required to establish and maintain effective “arrangements, systems and procedures to detect and report suspicious orders and transactions”.

An investigation by the Central Bank found that Goodbody failed to put in place an effective trade surveillance framework to comply with the rules between July 2016 and January 2022.

Goodbody has admitted to the breach.

The Central Bank had originally set a fine of €1.75m but this was reduced to €1.225m by way of a settlement discount.

2020 review

Seána Cunningham, director of enforcement and anti-money laundering at the Central Bank, said the failings that gave rise to this investigation were first identified during the course of the bank’s supervisory Market Abuse Thematic Review in 2020.

The findings of this review identified multiple suspected deficiencies in Goodbody’s compliance with the MAR.

“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,” she said.

Ms Cunningham added that 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,” she said.

According to the Central Bank, Goodbody failed to identify critical market abuse risks to which it was potentially exposed as a result of its business model and activities.

It said that when Goodbody undertook its first formalised market abuse risk assessment, in or around the same time as the commencement of the 2020 review, it failed to identify or address key market abuse behaviours to which it was potentially exposed.