The Central Bank has begun an investigation into an alleged contravention of market abuse regulations at Goodbody Stockbrokers.
In a note in a recently filed financial statement for Goodbody Stockbrokers Unlimited Company, the firm says the move followed the Central Bank issuing correspondence to the industry in January 2020 and July 2021.
This related to industry wide deficiencies in market conduct risk identification, market abuse trade surveillance systems and market abuse compliance frameworks.
The note states that the purpose of the Central Bank investigation at the firm, which began in January, is to gather sufficient information to determine whether a contravention has been committed.
The note adds that "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 note concludes.
The development came as pay to 'key management personnel' at at the stockbrokers last year more than doubled to €8.1m.
The accounts show key managers at Goodbody enjoyed the aggregate 118% increase in pay from €3.7m to €8.1m as a result of once off ‘other payments’ of €3.173m.
The exceptional €3.17m pay out to key management personnel contributed to pre-tax profits at Goodbody last year declining by 42pc from €5.5m to €3.17m.
Revenues at the stockbroking firm last year increased by 9pc 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.
At the end of last year, the firm had shareholder funds of €83.82m that included accumulated profits of €73.1m.
The firm’s cash funds increased from €75.1m to €88.43m.
