Legal Advice for Credit Unions

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Regulator suggests Eircom credit union take legal advice
The credit union regulator has advised the Eircom credit union to take legal advice about how it might obtain two Irish Stock Exchange reports detailing breaches of the exchange’s rules by Davy Stockbrokers in relation to the sale of certain bonds.

Brendan Logue, in a letter to the credit union in July, said he had asked the Irish Stock Exchange for its consent to release the two reports, which had been supplied to him on a private and confidential basis.

He said the exchange had informed him it would require Davy’s consent to release such confidential information, but Davy would not consent to the release of the two reports. Logue suggested the credit union ‘‘take legal advice as to whether any other circumstances might permit discovery of these reports from the Irish Stock Exchange’’.

The Eircom credit union – known as the E-Services and Communications Credit Union (Esccu), is angry that many credit unions last year signed a settlement deal with Davy Stockbrokers at a time when they were unaware that the exchange had concluded that Davy had breached the rules in relation to the sale of the bonds.

It wasn’t until April 2009 that the exchange released a statement, which said Davy had breached the exchange’s rules, though it did not publish the two reports on which the findings were based.

The statement revealed that the exchange had, as far back as 2006, been aware of possible breaches by Davy of conduct ofbusiness rules. The statement also revealed that the exchange had issued two reports – in June 2007 and in February 2008 – which were supplied to the regulator and to Davy, but were not made available to other parties. It is believed the reports on which the exchange’s statement were based were very critical of what had happened.

In May 2008,Davy offered a €35 million settlement to credit unions who had suffered losses on the controversial bonds. The vast bulk of credit unions accepted the offer, and agreed not to sue Davy. But sources have suggested that if the credit unions had known of the existence of the two exchange reports they might not have agreed to the settlement in such large numbers.

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