The controversial investigation into the so-called "St Patrick's Day massacre" last year when Anglo Irish Bank shares collapsed in value amid accusations of "rumour mongering" has concluded that Dublin's stockbrokers broke no market rules and in fact the market worked in an entirely proper and rational manner.
The unprecedented six-month long investigation, launched in a blaze of publicity by Patrick Neary, then chief executive of the Financial Regulator, probed accusations that certain stockbrokers had deliberately spread negative rumours about Anglo Irish Bank in order to short the stock and make a significant financial killing.
The Financial Regulator never publicly commented on the investigation subsequently and its critics accused the regulator of wasting time and resources probing selling of Anglo shares when the bank's problems were mainly self inflicted. Many said the probe was a smokescreen to distract attention from Anglo Irish Bank's huge exposures to commercial property.
The investigation involved seizing emails originated by stockbrokers and trawling through stock exchange data to identify unusual trading patterns.
The investigation, which will be formally ended shortly, found no evidence that any brokers in Ireland were spreading malicious rumours about Anglo Irish in order to drive the stock down.
On the contrary the investigation, according to the Financial Regulator's own account, found the following: "Overall, the patterns we observed suggested trading which was consistent with real and legitimate concern among investors about the deteriorating position of financial sector shares rather than any attempts to illegally manipulate the market."
Stockbrokers interviewed by the investigation team admitted they had kept clients informed of developments in the market surrounding Anglo Irish, but they had clearly flagged these as rumour, not fact. While the Financial Regulator advised the unnamed stockbroking firms to have better systems and controls for supervising staff handling market rumours, there was no evidence of actual market manipulation. Last week the Financial Regulator issued its annual report promising a new era of financial regulation and a move away from its previous principles-based system.