Bribery and payments to politicians
The Mahon Tribunal established that Davy, throughout the 1980s and 1990s, made a series of payments to the corrupt politician Liam Lawlor.[20][21]
In 1992, Davy made a political donation of £5,000 to Bertie Ahern, which ended-up in his personal account at Irish Life & Permanent plc.[22][23][24]
The next year the firm was the subject of an Irish Stock Exchange inquiry over the handling of the flotation of Greencore plc, the recently privatised Irish Sugar Company. The then Taoiseach, Albert Reynolds did not hold back in his criticism "you employ professional people to do the job...it was not done in a professional manner." The Managing Partner resigned.
Tax evasion
Davy admitted that its representatives in 1999 devised a Liechtenstein based tax evasion scheme uncovered by the public service broadcaster, RTÉ.[25][26][27] A Davy spokesman confirmed that the scheme outlined in the memo was not used.[28]
Insider trading scandal
In a high profile 2005 insider dealer case, the chief executive of Fyffes plc whose shares were the subject of the illicit trading said that he was "set up" by Davy and misled by a presentation to investors by Davy on behalf of his company. He also told the High Court he believed there was an arrangement between Davy and the party found responsible by the courts of insider dealing for the purpose of selling the shares they held in his company.[29][30]
Investment bonds mis-selling scandal
Two reports of an investigation into the "wholly inappropriate sale of perpectual bonds" by Davy to credit unions failed to involve any of the credit unions affected, leaving them "in the dark and powerless to add any value to the findings of this investigation". The Irish Stock Exchange, who has Davy as one of its largest shareholders, and the Central Bank of Ireland then declined to give them access to the reports. The Chairman of one of the Credit Unions who suffered large losses told his members "The failure to publish the reports is to place the complaints process in a shroud of secrecy. Such a failure of openness, transparency and fairness can only serve to undermine confidence in the complaints process, forcing those with grievances into the courts. Such a course of action is not in the interest of any of the stakeholders."[31] A statement issued by the Irish Stock Exchange in relation to these reports acknowledged important mitigating factors such as: the changed investment demands of credit unions which were seeking higher yield investments, fundamentally altered conditions in bond markets, and the extensive interaction between Davy and its credit union clients. The Exchange stated that it was satisfied that Davy had taken appropriate remedial action to ensure that internal controls and conduct of business procedures had been rectified to mitigate against any recurrence of the breaches discovered.[32]
Enfield Credit Union agreed to accept a €35 million offer from Davy to credit unions affected by the sale of investment bonds to settle its claim against the stockbroking firm that it claimed Davy mis-sold to them.
2011 Central Bank of Ireland fine
In December 2011, the Central Bank reprimanded and fined the firm for failing to report 61,542 transactions.[38] Davy said that the breaches were "technical" and had been reported to the regulator by the firm in September 2010. "These were wholly technical reporting issues, with no client impact which were identified by Davy and voluntarily reported to the Central Bank, " a spokesman said.[39]
Contract for Difference (CFD) pushing scandal
In April 2014 a young man described as "very vulnerable" with intellectual and other difficulties having suffered two strokes by the age of ten was awarded more than €2m by the High Court after the stockbroking engaged in "deliberate neglect" and breach of duty of care in encouraging him to invest large amounts of his inherited €5m monies in "seriously risky" contracts for difference resulting in substantial investment losses. The only child aged just 20 when he began his investment relationship with Davy using some €5m inherited from his dead parents, was "not a person in the full of their intellectual, physical and mental health", the judge said and "should have been obvious to any observer of average perception" and many tests carried out on him showed "alarming degrees of impairment". There was a "systems failure" in Davy concerning its treatment of the vulnerable young man who they had sign blank paperwork, failures in its documents section and failure in responsibility by higher management, including a senior manager who certified in a "paper-covering exercise" that their client was suitable for Contract for Difference (CFD) trading, the judge found.[40][41][42] In a statement by Davy, the firm acknowledged "that initial trading gains recorded by the plaintiff on his Davy account were more than offset by subsequent losses during the downturn in 2008 and that processes in place at that time did not take adequate account of the plaintiff's unique circumstances,". It said the "processes in place at Davy at the time the investments were made pre-dated major regulatory changes and these had been reviewed and enhanced in line with regulatory developments since".
Siteserv controversy
In January 2012 the board of Siteserv announced the appointment of Davy Corporate Finance to advise (alongside KMPG) on their strategic and corporate options given the pending maturity of their debt with IBRC. 18 months after the Siteserv deal Des Carville, the Davy adviser on the transaction joined the Department of Finance. In responses to parliamentary questions posed, the Department of Finance said that Carville had declared a potential conflict of interest arising from his involvement with Siteserv before he joined. The government said he "has not been involved in any issues on the Siteserv transaction" such as approving parliamentary questions, reviewing freedom of information requests and all internal discussions on the matter.
Catherine Murphy, the Independent TD who was prominent in querying the role of the department and state-owned IBRC in selling Siteserv at a €105 million loss to taxpayers, had further answers to parliamentary questions submitted to Noonan. Murphy also asked Noonan about a possibility that the purchase of Siteserv shares using privileged information might have occurred while the sale process was ongoing. Noonan said his department does not monitor share dealing activity. In response Davy said "Davy would welcome any investigation that the appropriate regulatory authorities initiate in respect of sharedealings in Siteserv and are confident that any such investigation will prove these allegations to be totally without foundation."[44]
2021 bond trading scandal
In March 2021 the Davy Group was fined €4.1m by the Central Bank of Ireland relating to a 2014 bond trading deal in which 16 Davy employees including CEO Brian McKiernan and former Chairman Kyran McLaughlin, were involved in acquiring bonds for a below market value price of €5.58m from a client and not disclosing to the client that it was Davy staff who had bought the bonds. The bonds were later sold on at a profit to a third party fund manager. Following the investigation by the Central Bank of Ireland and the issuing of the fine many of the senior executive team were forced to resign and the business was put up for sale.[45][46][47]
