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Davy and 16 former staff to face music as developer settles case over Anglo bonds

"Belfast Property Developer Settles Case Against Davy and Former Employees Over Anglo Irish Bank Bonds Sale"

Belfast-based property developer, Patrick Kearney, has reached a formal settlement in his case against Davy and 16 of its former employees. The case relates to the 2014 onward sale of his Anglo Irish Bank bonds. The Commercial Court was informed that Mr Kearney’s case has been settled, but final court orders have yet to be agreed. The parties are expected to return to court on Wednesday to seek final orders striking out the case. A deal has yet to be reached in a counterclaim brought against Mr Kearney by former Davy trader Tony O’Connor, alleging that Mr Kearney reneged on a profit share deal.

Mr Justice Denis McDonald was told that no order for costs would be sought against Davy. Costs orders would be sought against the personal defendants, except for Mr O’Connor. The businessman and his property investment firm, Kilmona Holdings Ltd, sued the stockbroker and the group comprising the so-called O’Connell partnership, including top executives, who were involved in the controversial trade of junior bonds in failed lender Anglo Irish Bank.

Mr Kearney claimed that Davy, while acting as his agent in the sale to what he was assured was a third party, had in fact sold them to the partnership, which went on to make a secret windfall profit from the onward sale. His claims were fully denied. In his case, Mr Kearney, represented by Martin Heydon SC and Eamon Marry BL, wanted to set aside a settlement of a 2015 case he brought alleging, among other things, his bonds were sold at an undervalue, and there was a conflict of interest on the part of Davy. That case was settled, with Mr Kearney and Kilmona receiving €1.125m.

Mr Kearney and Kilmona brought a new action against Davy and members of the O’Connell partnership after the Central Bank fined Davy €4.13m for regulatory breaches and failures to flag potential conflicts of interest arising from the Kearney-Kilmona bond transaction. In this, he claimed that fraud took place at a December 2015 meeting when the previous case was settled. Counsel for 15 of the 16, Marcus Dowling SC, previously told the court that the partnership made a profit of €9.3m from the onward sale of the bonds. The 15 argued that there were inconsistencies in Mr Kearney’s allegation that he was induced into signing the 2015 settlement by fraudulent misrepresentation. They also claimed that he did, in fact, know that Davy employees were members of the partnership. All of the claims were denied.

The case is scheduled to return to court on Wednesday.

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