Goodbody Stockbrokers investigated by Central Bank 

Purpose of investigation is to gather sufficient information to determine whether a contravention has been committed

The disclosure of the investigation is contained in Goodbody Stockbrokers UC's new accounts — which also disclose a drop in pre-tax profits. Stock picture: Leah Farrell/RollingNews.ie

Goodbody Stockbrokers is being investigated by the Central Bank concerning alleged contravention of market abuse regulations.

The disclosure of the investigation is contained in new accounts for Goodbody Stockbrokers UC which show the business’s pre-tax profits last year declined by 42% from €5.5m to €3.17m.

Under the heading of contingent liabilities, a note states that the Central Bank notified the firm in January of its decision to commence an investigation into alleged contravention of market abuse regulations.

The note says this followed the Central Bank issuing correspondence to the industry in January 2020 and July 2021 relating to industry-wide deficiencies in market conduct risk identification, market abuse trade surveillance systems, and market abuse compliance frameworks.

The note says the purpose of the investigation is to gather sufficient information to determine whether a contravention has been committed.

It says “the steps taken to date do not involve any conclusion that there has been a breach of the law by the company or its officers”.

“Given the early stage of this process, the outcome here is uncertain.”

The accounts also show that pay to ‘key management personnel’ at Goodbody last year more than doubled to €8.1m. Key managers enjoyed the aggregate 118% increase in pay, from €3.7m to €8.1m, as a result of once-off ‘other payments’ of €3.173m.

Revenues at the stockbroking firm last year increased by 9% from €72.4m to €79.2m made up of €75.93m from contracts with customers and €3.26m in trading income.

In September 2021, AIB completed the purchase of Goodbody for €138m including the stockbroking and wealth management group’s €56m of surplus cash, in a deal that would protect bonuses for staff of the securities firm.

The group has offices in Dublin, Cork, and Galway along with a branch in the UK.

The overall €8.1m pay to key management personnel last year was made up of salaries of €4.4m, ‘other payments’ of €3.17m, pension costs of €201,000 and directors’ fees of €320,000.

A number of directors at Goodbodys are included in key management personnel and directors’ pay increased more than three fold from €1.55m to €4.68m largely due to once off 'other payments’ of €2.68m.

The directors state that excluding a €3.6m cost concerning the sale to AIB, Goodbody Stockbrokers UC's underlying pre-tax profits last year increased by 11%.

The firm’s fee income last year increased by 34.5% from €32.2m to €43.47m while commission income reduced by 8% from €25.89m to €23.89m. The business’s ‘other income’ also decreased by 7% from €9.2m to €8.56m.

Numbers employed at the business last year increased from 316 to 327 as staff costs increased from €39.92m to €46.47m.

The directors state that investment banking experienced a strong out-turn with year on year revenue growth from trading, commission, research and corporate advisory fees.

The business’s wealth management business also experienced strong growth in funds under management while the Goodbody Asset Management business continued to grow with assets under management increasing significantly during the year.

The directors state that the funds delivered a very strong performance in 2021 with all funds at or well ahead of their respective benchmark.

Directors last year purchased and sold securities to the value of €1.1m through the company on normal stock exchange settlement terms.