Two people have been arrested in connection with insider trading in the Australia dollar versus the United States dollar, known as the AUD/USD pair, as data was allegedly leaked by a staff member of the Australian Bureau of Statistics (ABS) to a trader at National Australia Bank (NAB) before said data was made public, hence giving the trader the ability to act on the non-public information to exploit FX market price direction (i.e. insider trading).
Australian authorities said they discovered evidence that a 26-year-old male employee at NAB was receiving sensitive information from a 24-year old male employee of the ABS, and how it will be alleged in court that the 26-year old man was obtaining this market sensitive information before its official release by the ABS, then using it to enter into foreign Exchange derivative products and personally profit from favourable movements in the prices of those derivatives.
$7 Million Realized, Using Retail FX Brokers in an Effort to Conceal Trades
This insider trading activity, described in the release, occurred between August 2013 and May 2014, and has resulted in profits of approximately $7 million dollars. This behaviour has now been restrained by the AFP led Criminal Assets Confiscation Taskforce under Commonwealth proceeds of crime legislation.
According to Forex Magnates' sources, the authorities were tipped off by a number of retail forex brokers in Australia, as the alleged insider trader was said to have used several brokers, such as Pepperstone and Axitrader to make the FX trades that contributed the $7 million profit mentioned.
Sources close to the development said that non Australia-based brokers may also have been by the NAB trader, as only a small portion of that profit was thought to have been realized with local firms. The trades made by that NAB trader were apparently suspicious which lead to the firms reportedly sharing their concerns with the authorities, which may have aided the investigation considerably, Forex Magnates opines.
Both Traders Nabbed, as Multiple Authorities Are Involved in Investigation
The two were reportedly arrested and charged, and the ABS said that the action it took against its employee was the result of a joint Australian Federal Police (AFP) and Australian Securities and Investments Commission (ASIC) investigation, supported by the Australian Bureau of Statistics (ABS), and how the ABS staff member was arrested today by the Australian Federal Police for a range of offences under the Criminal Code Act 1995 and Corporations Act 2001. The ABS staff member in question was said to be a relatively junior member who possessed access to the data, and who has now been suspended following the development. The agencies executed 8 search warrants, while making the respective arrests, and seized $9,000 in cash, according to the press release.
AFP Acting National Manager Crime Operations, Ian McCartney said today's action sends a strong message to those engaging in this type of criminal activity, according to the joint issued press release by AFP and ASIC, where he said,"The AFP and ASIC have worked together closely on this serious and complex investigation, utilising the resources and expertise of both agencies to bring about today's arrests."
Both NAB and the ABS provided their full cooperation and assistance to police throughout the investigation, as per the joint statement from AFP and ASIC, and echoed by Mr. McCartney.
"The assistance of the NAB and ABS in this matter was invaluable and has greatly contributed to the successful actions of the AFP and ASIC today." Mr. McCartney added, "Investigations like this send a clear message to anyone who is thinking of engaging in this type of criminal activity - we have the ability to monitor you and take action, as we've done today."
ASIC's Head of Markets Enforcement, Chris Savundra said ASIC is dedicated to taking strong enforcement action against insider trading, as per the release, "Insider trading is a serious criminal offence which will not be tolerated because it has the potential to destroy trust, discourage participation, and undermine confidence in the integrity of Australia's financial markets." Mr. Savundra concluded,"We reiterate that the outcome of today's operation is a testament to the close working relationship and cooperation between the AFP and ASIC, and the dedication and expertise of the teams involved."
The Charges Facing the 26-Year-Old Clifton Hill Man, from NAB, Include the Following Offences:
- One count of conspiracy to engage in insider trading, pursuant to section 11.5 of the Criminal Code Act 1995, which is an offence by virtue of sub-section 1311(1) of the Corporations Act 2001 in that they contravened paragraph 1043A(1)(c) of the Corporations Act 2001.
- One count of giving a bribe to a Commonwealth public official, with the intention to influence the official in the exercise of his duties as a Commonwealth public official, contrary to section 141.1(1)(a)(iii) of the Criminal Code Act 1995 (Cth);
- Three counts of insider trading, by trading in foreign exchange derivatives whilst in possession of inside information not generally available to the public, contrary to sections 1043A(1)(c) and 1311(1) of the Corporations Act 2001 (Cth);
- One count of dealing in identification information using a carriage service and dealing with that identification information, with the intention to use the identification information to pretend to be or to pass themselves off as another person for the purpose of facilitating the commission of an offence, contrary to section 372.1A(1) of theCriminal Code Act 1995 (Cth).
- One count of dealing in proceeds of crime, money or property worth AU$1,000,000 or more, contrary to section 400.3(1) of the Criminal Code Act 1995 (Cth);
He is scheduled to appear in the Melbourne Magistrates Court, as per the update.
The 24-Year-Old Belconnen Man, from ABS, Was Charged and Faces the Following Offences:
- One count of conspiracy to engage in insider trading, pursuant to section 11.5 of the Criminal Code Act 1995, which is an offence by virtue of sub-section 1311(1) of the Corporations Act 2001 in that they contravened paragraph 1043A(1)(c) of the Corporations Act 2001.
- One count of receiving a bribe as a Commonwealth public official, contrary to section 141.1(3)(a)(iii) of theCriminal Code Act 1995 (Cth);
- One count of abuse of public office to dishonestly obtain a benefit, contrary to section 142.2(1)(b)(i) of theCriminal Code Act 1995 (Cth);
- One count of dealing in proceeds of crime, money or property worth $10,000 or more, contrary to section 400.6(1) of the Criminal Code Act 1995 (Cth).
He is scheduled to appear in the Canberra Magistrates Court, respectively.
