$7 million restrained in epic insider trading case

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A 26-year-old and a 24-year-old have been arrested after an investigation revealed they were engaging in serious insider trading and abuse of public office, garnering profits of around $7 million.

The men, revealed as Lukas Kamay and Christopher Hill by the Sydney Morning Herald, were arrested on Friday and then released on bail following a joint Australian Federal Police (AFP) and ASIC investigation.

The authorities uncovered evidence that Kamay, an employee of the National Australia Bank (NAB) was receiving sensitive information from Hill, who worked at the Australian Bureau of Statistics (ABS).

It is alleged that Kamay was obtaining this market sensitive information before its official release by the ABS, and using it to enter into foreign exchange derivative products in order to personally profit from favourable movements in the prices of those derivatives.

This trading activity, occurring between August 2013 and May 2014, has resulted in profits of approximately $7 million. This has been restrained by the AFP-led criminal assets confiscation taskforce under Commonwealth proceeds of crime legislation.

On Friday both the AFP and ASIC executed eight search warrants in Melbourne and Canberra that led to the arrests.

Items seized included $9,000 in cash.

“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,” said Ian McCartney, AFP acting national manager in crime operations.

But today the Sydney Morning Herald reported warnings that the $7 million scandal was just the tip of the iceberg.

This was according to Scott Schuberg, the head of stockbroking firm Rivkin, which was founded by Australia’s most notorious insider trader Rene Rivkin.

''For every 26-year-old kid insider trading, there are probably 10 smarter men and women not stupid enough to settle their trades through Australian FX market makers who know their clients' profitability intimately,'' he reportedly said.
 
He added that both NAB and the ABS deserved to face public scrutiny.
 
''The reality is that the reputations of both of these organisations should be damaged, because that's the only way they'll focus on deeper cultural reform."

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