The sanctions had been recommended by the CBI's Panel of Assessors (the "Panel") on 10 January 2022, following an investigation carried out by the Enforcement Division of the CBI. The Panel had been established in 2013, pursuant to the 2005 Regulations, and is comprised of senior and retired judges.
The original investigation related to the purchase by Mr. Lynch of 200,000 shares in C&C Ltd., through his retirement fund in 2008. The Deputy Governor of the CBI had found reason to suspect that Mr. Lynch had contravened Regulation 5(1) of the 2005 Regulations, which states that;
"…a person to whom this paragraph applies who possesses inside information shall not use that information by acquiring or disposing of, or by trying to acquire or dispose of, for the person's own account or for the account of a third party, directly or indirectly, financial instruments to which that information relates."
During a preliminary hearing the Panel concluded that:
- the standard of proof required in the assessment was beyond a reasonable doubt; and
- that, with regard to the 'mental ingredient', if the CBI proved that the respondent acquired the shares when he was in possession of 'insider information', it would be presumed that the respondent had used that information in contravention of Regulation 5, but without prejudice to the respondent's rights, particularly his right to rebut such presumption by establishing that the information did not play a role in his decision.
The sanctions recommended against Mr. Lynch by the Panel:
- a public caution;
- a €75,000 monetary penalty;
- a 5 year disqualification from being concerned in management of, or having qualified holding in, any regulated financial service provider; and
- the payment of the CBI's costs, for the holding of the assessment.
The Court was satisfied that the Panel had adhered to the prescribed procedures and to the requirements of natural and constitutional justice, both in relation to the manner in which Mr. Lynch was found to be in breach and the manner in which the sanction was decided upon. The Court was also satisfied that the penalties suggested by the Panel were proportionate, by reference to the gravity of offence and whether the respondent's conduct had any effect on the integrity of the market and on investor confidence.
The Court confirmed the sanctions under Regulation 44 of the 2005 Regulations.
The 2005 Regulations have now been replaced by S.I. No 349 of 2016, European Union (Market Abuse) Regulations 2016, which give effect to an EU Regulation and Directive, illustrating the ever increasing scope of regulation in this area.
Written by: Eimear Burke and James Roche
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