The Citigroup Inside Men
March 21st 2007 13:02
It all happened in a day on 19th August, 2005 when two Citigroup Australia traders, over a smokie break, exchanged ambigious information that was viewed by the regulators, ASIC, as insider information.
The circumstances surrounding the event on that fateful day was good enough to put into a movie script ala Infernal Affairs, more so when guessings were needed following the information exchange.
Two men separated by a "Chinese Wall" came together during a smoking break and were found out by the authorities through one of the men's trading and are now hot on thier heels. Thier acts were deemed as an offence but the information exchanged were simple and trivial to the laymen. Is this a simple case of yes or no? Let the game begin
Nevertheless, the world is watching this case as it deals with "Chinese Wall" within an entity that has different operations that could trascend conflict of interests and possibly, what consititute a manipulation of insider information.
"In its statement to the Federal Court in Sydney, ASIC says Citigroup conducted "insider trading" on Aug. 19, 2005 when a trader bought 1.14 million Patrick shares, but later sold Patrick shares after being told by his boss to stop trading in Patrick.
On that day, Citigroup corporate investment advisers knew the firm was acting for Toll in relation to the takeover, ASIC says.
Malcolm Sinclair, head of equities at Citigroup Australia, knew this "inside information" and, around lunchtime, met Paul Darwell, head of equity derivatives, who was not privy to the information, says ASIC.
"Do you know who is buying Patrick's shares?," Sinclair asked Darwell, adding "We may have a problem with that", says ASIC.
Because of intense media and market speculation of a possible takeover of Patrick by Toll, and the fact that Sinclair was "from the private side of the Chinese Wall", ASIC says the comments made Darwell believe Citigroup was acting for Toll on Patrick.
Darwell was therefore "in possession of information he knew or ought reasonably have known as inside information", says ASIC.
Later that day, Darwell asked Citigroup trader Andrew Manchee to go for a cigarette break outside their office in Sydney where he told Manchee to stop buying Patrick shares, says ASIC.
Manchee had already bought 1.14 million Patrick shares.
While Darwell gave no reason, Manchee made the supposition that Citigroup was acting for Toll in the takeover bid for Patrick, says ASIC.
ASIC says this was "inside information" and Manchee later sold 192,352 shares in Patrick -- about 17 percent of his stake -- therefore Citigroup had broken insider trading laws.
Patrick shares opened at $5.75 that day and closed at $6.45, ASIC said, adding that Citigroup's trading forced the price up.
The shares bought by Manchee on Aug. 19 made up 5.7 percent of the volume of Patrick shares traded that day, ASIC said.
Toll Holdings declined to comment."
Full story here: Smoke break at heart of Citigroup Australia insider trial
The circumstances surrounding the event on that fateful day was good enough to put into a movie script ala Infernal Affairs, more so when guessings were needed following the information exchange.
Two men separated by a "Chinese Wall" came together during a smoking break and were found out by the authorities through one of the men's trading and are now hot on thier heels. Thier acts were deemed as an offence but the information exchanged were simple and trivial to the laymen. Is this a simple case of yes or no? Let the game begin
Nevertheless, the world is watching this case as it deals with "Chinese Wall" within an entity that has different operations that could trascend conflict of interests and possibly, what consititute a manipulation of insider information.
"In its statement to the Federal Court in Sydney, ASIC says Citigroup conducted "insider trading" on Aug. 19, 2005 when a trader bought 1.14 million Patrick shares, but later sold Patrick shares after being told by his boss to stop trading in Patrick.
On that day, Citigroup corporate investment advisers knew the firm was acting for Toll in relation to the takeover, ASIC says.
Malcolm Sinclair, head of equities at Citigroup Australia, knew this "inside information" and, around lunchtime, met Paul Darwell, head of equity derivatives, who was not privy to the information, says ASIC.
"Do you know who is buying Patrick's shares?," Sinclair asked Darwell, adding "We may have a problem with that", says ASIC.
Because of intense media and market speculation of a possible takeover of Patrick by Toll, and the fact that Sinclair was "from the private side of the Chinese Wall", ASIC says the comments made Darwell believe Citigroup was acting for Toll on Patrick.
Darwell was therefore "in possession of information he knew or ought reasonably have known as inside information", says ASIC.
Later that day, Darwell asked Citigroup trader Andrew Manchee to go for a cigarette break outside their office in Sydney where he told Manchee to stop buying Patrick shares, says ASIC.
Manchee had already bought 1.14 million Patrick shares.
While Darwell gave no reason, Manchee made the supposition that Citigroup was acting for Toll in the takeover bid for Patrick, says ASIC.
ASIC says this was "inside information" and Manchee later sold 192,352 shares in Patrick -- about 17 percent of his stake -- therefore Citigroup had broken insider trading laws.
Patrick shares opened at $5.75 that day and closed at $6.45, ASIC said, adding that Citigroup's trading forced the price up.
The shares bought by Manchee on Aug. 19 made up 5.7 percent of the volume of Patrick shares traded that day, ASIC said.
Toll Holdings declined to comment."
Full story here: Smoke break at heart of Citigroup Australia insider trial
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