THE DEPARTMENT of Finance has released further details about the career of its new secretary general, John Moran, at financial firm Zurich Capital Markets to show he had no involvement in dealings at its New York subsidiary that were censured by the US markets regulator.
The US Securities and Exchange Commission (SEC) fined the New York-based company $16.8 million for aiding and abetting four hedge funds which defrauded mutual funds that prohibited trades based around the timing of markets closing.
The New York office financed the hedge funds to carry out the transactions between 1999 and 2003.
Sinn Féin TD Pearse Doherty was expelled from the Dáil Chamber on Thursday – two days after Mr Moran’s appointment as secretary general – after persisting with claims the former banker was associated with improper trading.
Mr Moran was one of between eight and 10 founding employees and a chief executive of Zurich Capital Markets, a subsidiary of Swiss insurance group Zurich, from 1997 until 2005. The company had offices in New York, Dublin and London.
The department said Mr Moran was not part of senior management in the New York office and did not have any “functional responsibility” for it until he was in charge of winding it down from September 2003.
Mr Moran led the business in Dublin and secured a banking licence in September 2001. As managing director of Zurich Bank, Mr Moran cited the growth in business of “customised lending to the alternative investments industry” – another term for the hedge fund industry – in its 2001 accounts.
A spokesman for the department said that none of the hedge fund lending subject to the SEC censure was written in Dublin.
The department said the Dublin operation was a separate business reporting into the firm’s global head office in New York. Following the departures of two senior executives in New York in 2002, a new management team appointed in New York by Zurich conducted a global compliance review and gave the Dublin bank a clean bill of health.
Zurich Financial Services, the company’s parent, decided to exit the capital markets business, and Mr Moran was asked to manage the wind-down of Zurich Capital Markets in Asia from Sydney.
He subsequently moved to New York for the first time in September 2003 to manage the global wind-down of the business. In this role Mr Moran shut down the “market timing” trades previously approved in New York.
After his arrival in New York, during the fourth quarter of 2003, the SEC asked the company to conduct discovery around the market timing trades and Mr Moran set up a legal team to work with the SEC investigation. He was never interviewed by the SEC.
