Ireland’s National Treasury Management Agency (NTMA) has dropped Davy Stockbrokers as a primary dealer in Irish government bonds following a record Central Bank of Ireland fine for the company last week.

The move resulted in the country’s largest stockbroking firm shutting its bond desk with immediate effect.

The chief executive and two other executives at Davy resigned on Saturday following a public outcry over the €4.1 million fine for breaching market rules.

The central bank fined Davy after an investigation into a group of 16 of its staff, who the regulator said sought to profit personally by taking the opposite side of a deal in 2014 with a client — while failing to tell either the client or its own compliance officials.

Bloomberg News called the affair the “worst scandal to hit Dublin’s stockbroking community in decades.”

Davy said in a statement that following the decision to close its bond desk “none of the individuals involved in the 2014 transaction are working in Davy.”

The NTMA said: “The board of the National Treasury Management Agency (NTMA) has withdrawn J&E Davy’s authority to act as Primary Dealer in Irish Government bonds with immediate effect.

“The board reached its decision based on its assessment of the very serious findings relating to the firm that were made by the Central Bank of Ireland last week and following engagement with investors in Irish Government debt over recent days.

“A primary concern for the NTMA is to maintain the reputation of Ireland as a sovereign issuer in the bond market and the orderly functioning of the market for Irish Government debt.

“In this context, the NTMA believes that the behaviour described in the Central Bank findings falls substantially short of the standards expected from market counterparties, peers and colleagues in the bond market and is potentially damaging to Ireland’s reputation as a sovereign issuer.”

In its enforcement action notice, the Central Bank of Ireland said: “The Central Bank’s investigation arose from a transaction a group of 16 Davy employees (the Consortium) undertook in a personal capacity with a Davy client in November 2014 …

“Within the Consortium was a group of senior executives (the Committee).

“In permitting the transaction, Davy prioritised facilitating an opportunity for the Consortium to make a personal financial gain over ensuring that it was complying with its regulatory obligations.

“The transaction highlighted a weak internal control framework within Davy in relation to conflicts of interest management and personal account dealing.

“All of this served to create an elevated risk of investor detriment.

“Following details about the transaction becoming public four months after it occurred, Davy contacted the Central Bank to provide an explanation.

“At that stage, Davy failed to disclose the full extent of the wrongdoing.

“This lack of candour was treated as an aggravating factor in this case …”