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Mining director in major insider trading case

A mining managing director was involved in an insider trading case that belongs “in the most serious category in all the circumstances,” NSW Supreme Court judge Peter Hall has heard.

Prosecutor Robert Bromwich made the remark of former Hanlong Mining director Steven (Hui) Xiao, who pleaded guilty to three charges of insider trading on September 2.

Xiao is said to have made 102 illegal trades in shares and contracts for difference (CFDs) in two companies with which Hanlong Mining was conducting takeover discussions. The companies were uranium explorer Bannerman Resources and Sundance, which is based in Perth.

A Chinese national, Xiao was extradited to Australia on October 10 2014 after his arrest in Hong Kong in January that year. He now faces a potential maximum 10 year jail term for each count.

Although others were also involved in the same insider trading acts, the prosecution has argued that this did not diminish Xiao’s breach of trust.

“There’s simply no evidence the controllers of the parent or subsidiary companies knew what was going on,” Bromwich said.

“That a number of individuals knew does not diminish the breach of trust, it worsens it because it means there are a number of people working in concert against the interests of the company.”

While Xiao’s involvement in insider trading is not in question, the prosecution and his defence are debating the severity of his crime, and what the resulting punishment should be.

The prosecution compared Xiao’s case to that of Lukas Kamay, the former National Australia Bank employee who back in March 2015 received the heaviest sentence yet brought down for insider trading.

Kamay was sentenced to seven years and three months in jail back in March, with a non-parole period of four-and-a-half years.

Xiao’s defence barrister, Malcolm Ramage, said it was “an exaggeration to say this is approaching the worst case.”

Source: AFR

Talk to GRC Solutions today about our Insider Trading and Insider Conduct courses, as well as our broader Salt Compliance online training library.

Getting nabbed for Australia’s largest insider trading case

insider trading 

Apparently times are so tough that even a salary of $200,000 a year can push one to pursue crime. Lukas Kamay, 26, a former NAB employee had the brilliant idea of partnering up with an old university mate, Christopher Russell Hill, an Australian Bureau of Statistics employee, to make millions, buy lavish things and mosey on through life as if nothing ever happened.

Kamay and Hill met at Monash University where they attended business school. The two friends plotted an elaborate scheme where Hill would use his position as an ABS officer to provide Kamay with employment, trade and retail figures just moments before they were officially released to the public. Kamay would then use the information to make trades based on which direction the Australian dollar was likely to go. The two were such good partners in crime they continued to keep in touch through prepaid mobile phones registered under fake names.

While Kamay paid Hill thousands, Kamay made millions in secret, $7 million in fact. Kamay continued living the high life using the secret money to make extravagant purchases like a luxury apartment, featured on the Block, for $2.5 million.

Although the first modest move was a $1,000 trade, greed eventually got the best of Kamay when a profit of $2,509,776 was made in a single day. It is no surprise the scheme spiralled out of control, leading to the pair being arrested in May of this year, after the Australian Federal Police and the Australian Securities and Investment Commission conducted a lengthy investigation.

On 16 September 2014, Hill pleaded guilty to six criminal charges and Kamay entered similar pleas. The two were granted bail to face a directions hearing in Victorian Supreme Court on October 1.

Inside trading unveiled. Don’t let your organisation be the next victim.

Inside trading

Source: MNN 2014

It’s the biggest insider trading case Australia has ever had. And it was cracked by a foreign exchange broker who used LinkedIn to make a vital connection between the two men accused.

NAB associate director Lukas Kamay made over 50 large online bets on the Australian dollar just seconds before significant economic news was announced.

Kamay’s bets drew the attention of NAB broker Owen Kerr, who turned to LinkedIn to confirm his suspicions: Kamay had an old university friend – Christopher Hill – who was working at the Australian Bureau of Statistics. It’s alleged that Hill, who had access to a wide range of confidential data as part of his position, supplied inside information to Kamay.

NAB and the ABS monitored the two men in their offices for nine months using surveillance cameras and phone taps before cracking the $7 million scandal.

Kamay is said to have offered Mr Hill a $50,000 bribe to disclose the information. He used his earnings from the foreign exchange market to purchase Alisa and Lysandra Fraser’s apartment from The Block worth $2.4million. This and other assets have now been frozen by the Australian Federal Police (AFP) and Australian Securities and Investments Commission (ASIC).

NAB has undertaken to assure the public that “Kamay’s trades were made in his personal capacity and that no NAB money, no NAB customer money or NAB systems were used”.
CEO Cameron Clyne also sent an internal message to all staff last Friday, declaring, “I want to be clear: the activity alleged by authorities is unlawful and completely unacceptable”. He urged employees to report any illegal behaviour.

The consequences of insider trading are serious
Insider trading could occur within any organisation with or without strict regulations. The penalties for insider trading are heavy, and the potential for serious reputational damage high.

Are all of your employees familiar with insider trading laws? Employees who are shareholders in particular need to know when they can and cannot trade in company shares.
Make sure your organisation is fully compliant with insider trading laws today.

 

 

Source: Sydney Morning Herald, Alleged insider trading case cracked through LinkedIn