Irish insider trading conviction shows commitment to combat market abuse

Declan Service was charged with violations of the 2016 EU (Market Abuse) Regulations – and the 2014 Companies Act – after the Central Bank of Ireland reported suspicious transactions involving shares in Open Orphan plc, now called hVIVO plc, a pharmaceutical company listed on the AIM stock market in London.

An investigation conducted by the Garda National Economic Crime Bureau (GNECB), with the assistance of the Central Bank, found that these transactions were influenced by protected information concerning the company's future.

Service pleaded guilty in the Dublin Circuit Criminal Court to one charge of possessing information used in the acquisition and disposal of financial instruments that dated back to May 2020. However, Service did not admit guilt for another “near identical” charge relating to insider trading.

He faces a fine of up to €10,000,000, a prison sentence of up to 10 years, or a combination of both. His sentencing date has been scheduled for 20 December.

Lisa Carty of Pinsent Masons said: “This is the first conviction for insider trading contrary to the Market Abuse Regulations in Ireland, just over a year after the Central Bank’s first assessment that an individual had engaged in insider trading.”

She added: “It demonstrates the action both the Central Bank and the GNECB are willing to take to combat market abuse in the Irish financial system and to hold individuals to account for breaches of market abuse rules.”

Service’s conviction comes after Philip Lynch became the first person in Ireland to be held accountable for insider trading by the Central Bank, which recommended a €75,000 fine and disqualification from involvement in a regulated financial service provider.

It also recommended that Lynch pay €37,000 to cover its legal costs. The Central Bank’s recommendations were subsequently confirmed by the Irish High Court.