The Central Bank has ordered Bloxham stockbrokers to cease all regulated activities following the discovery of "financial irregularities" at the securities firm.
Bloxham has agreed to transfer its asset management business to Ireland's largest stockbroker Davy, which in March announced it had also acquired Bloxham’s private client business.
In a statement, Bloxham said the issues, discovered late last week and reported to the Central Bank on Thursday, related to overstating of income over a number of years. It is understood the practice occurred in four of the last five years.
"The financial partner of the firm was immediately suspended and the Central Bank informed," Bloxham said. "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."
The financial partner, according to the Bloxham website, is Tadgh Gunnell, who joined the firm in 2000.
Bloxham said no client funds were involved or at risk from the issues uncovered. "The impact on the firm is that it no longer holds sufficient capital to meet the licensing requirements of the Central Bank to carry on trade as a stockbroker," it added.
The Central Bank said it had imposed directions on Bloxham to cease all regulated activities with immediate effect at 5pm on Friday.
"Early this morning, Bloxham agreed to transfer all private client and fund management business to Davy," the Central Bank added.
The Central Bank and Seamus Murphy of KPMG are investigating the matter. It said that all former private clients of Bloxham were now clients of Davy, with the exception of some 1 per cent who had decided to make other arrangements.
The Irish Stock Exchange confirmed that Bloxham had been suspended as a member firm.
Minister for Finance Michael Noonan said today he hoped client funds would not be put at risk.
"In situations like that, the concern always is that the funds of clients would be put at risk, but it seems from the Central Bank statement that clients funds are not held at Bloxhams and that clients are protected," he said in Limerick.
"There are other considerations which make it essential for the Central Bank to prevent Bloxhams from trading further."
The acquisition of Bloxham's private client and asset management businesses will see the value of assets managed by Davy increase by €1.2 billion.
"The transition to Davy is a very positive development for Bloxham's asset management clients who will continue to be serviced by the same award winning team, but as part of a much larger and well capitalised business," Davy chief executive Tony Garry said.
About 20 of Bloxham's 70 staff are to transfer to Davy.
All former private clients of Bloxham, who are now clients of Davy, should contact (01) 611 9200 if they have any queries.
