The material on this site is for financial institutions, professional investors and their professional advisers. It is for information only. Please read our Terms & Conditions, Privacy Policy and Cookies before using this site. Please see our Subscription Terms and Conditions.


All material subject to strictly enforced copyright laws. © 2021 Euromoney, a part of the Euromoney Institutional Investor PLC.
Banking

Insider trading case sends out global ripples

Australian regulator’s charges cast doubt on legitimacy of prop trading.

By Chris Wright

Citigroup added Australia to its bulging global portfolio of regulatory clashes in April but the latest case might have implications that go well beyond that country’s borders. At stake is the legal status of proprietary trading at investment banks that also conduct advisory business – that is, most of them.

The Australian Securities & Investments Commission filed charges in Australia’s Federal Court alleging, among other things, that Citi engaged in insider trading and did not have sufficient measures in place to stop conflicts of interest. It wants Citi to declare that it has breached the conflicts and insider trading provisions of Australia’s Corporations Act and to pay a penalty of up to $1 million to the Commonwealth of Australia.

Cigarette break

The charges relate to Toll Holdings, an Australia-listed transportation group, which engaged Citi to advise on a possible takeover of rival Patrick Corp late in 2004. In August 2005, a trader on Citi’s proprietary trading desk began buying heavily in Patrick shares. Citi’s head of equities, Malcolm Sinclair, who was aware of the mooted takeover, noticed the trades and contacted the head of equity derivatives, Paul Darwell. “We may have a problem with that,” he told Darwell.

You have reached premium content. Please log in to continue reading.

Read beyond the headlines with Euromoney

For over 50 years, our readers have looked to Euromoney to stay informed about the issues that matter in the international banking and financial markets. Find out more about our different levels of access below.

SUBSCRIBE ONLINE TODAY

Unlimited access to Euromoney.com and Asiamoney.com

Expert comment, long reads and in-depth analysis interviews with senior finance professionals

Access the results of our market-leading annual surveys across core financial services

Access the results of our annual awards, including the world-renowned Awards for Excellence

Your print copy of Euromoney magazine delivered monthly

£73.75 per month

Billed Annually

FREE 7 DAY TRIAL

Unlimited access to Euromoney.com and Asiamoney.com, including our top stories, long reads, expert analysis, and the results of our annual surveys and awards

Sign up to any of our newsletters, curated by our editors

LOGIN NOW

Already a user?

We use cookies to provide a personalized site experience.
By continuing to use & browse the site you agree to our Privacy Policy.
I agree