Citigroup dealer in Australia denies insider trading

Citigroup dealer in Australia denies insider trading

	Published : Tue, 27 Mar 2007 07:53 By : Agencies Print this Story

SYDNEY (XFN-ASIA) - A Sydney-based dealer for Citigroup denied insider trading charges brought by the Australian corporate regulator.

The Australian Securities and Investments Commission (ASIC) has accused Citigroup's Australian arm of insider trading and failing to manage a conflict of interest over stock trades in logistics firm Patrick Corp in August 2005.

In a case which could have international implications for the way investment banks deal in shares, ASIC charged Citigroup after one arm of the bank bought Patrick shares while another was helping organize a takeover of the firm.

Citibank was advising bidder Toll Holdings on the takeover and ASIC alleges it had inside information when one of its traders bought Patrick shares on Aug 19, a day before the bid was announced.

The trader who bought the shares, Andrew Manchee, said he never knew Citibank was advising Toll about the Patrick bid.

'It didn't cross my mind that Citigroup had any involvement,' he told the court, Australian Associated Press reported.

Manchee also denied offloading the shares before the end of the trading day because Citigroup's head of equity derivatives Paul Darwell advised him to stop buying Patrick shares as the pair talked while smoking cigarettes outside the bank's Sydney offices.

Manchee said he sold the shares to 'take profits' and the decision had nothing to do with his conversation with Darwell, who knew about the Patrick deal.

He was questioned by ASIC lawyer Brett Walker about a statement he gave to the regulators in the months after the incident, when he said Darwell's advice 'might have been one of the things I thought about' when selling.

Manchee said that at the time, he thought he was answering a hypothetical question.

When Walker suggested he was lying or being misleading, Manchee replied: 'I disagree.'

Citigroup has denied ASIC's claims. If found guilty of the civil charges, it faces a fine of up to one mln aud.

If upheld, the case could also force a revision of the so-called 'Chinese walls' used by investments banks -- the safeguards used to stop information leaking between departments to prevent insider trading.

(1 usd = 1.23 aud)

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