Two men arrested for insider trading and abuse of public office, $7 million restrained

Two men have been arrested by the Australian Federal Police (AFP) today for offences relating to insider trading, money laundering, corruption and abuse of public office.

The arrests are the result of a joint AFP and ASIC operation after suspicious trading in foreign exchange derivatives was identified and monitored.

Authorities discovered evidence that a 26-year-old man, an employee of the National Australia Bank (NAB), was receiving sensitive information from a 24-year old man, an employee of the Australian Bureau of Statistics (ABS).

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.

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.

Earlier today, the AFP and ASIC executed eight search warrants in Melbourne and Canberra, arresting the 26-year-old Clifton Hill man and the 24-year-old Belconnen man.

The 26-year-old Clifton Hill man has been charged with a range of offences relating to the use of inside information from ABS to unlawfully profit through the trading of foreign exchange derivatives and corrupting a public official.

The 24-year-old Belconnen man has been charged with offences relating to insider trading, receiving a corrupt benefit, release of sensitive information, and abuse of public office.

Items seized during the search warrants include $9,000 in cash.

Both the NAB and the ABS provided their full cooperation and assistance to police throughout the investigation.

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.

‘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,’ Acting Assistant Commissioner McCartney said.

‘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.’

‘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.

‘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 said.

‘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.’

Charge information:

The 26-year-old Clifton Hill man was charged with 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 section 1311(1) of the Corporations Act 2001 (Corporations Act) in that they contravened section 1043A(1)(c) of theCorporations Act.
  • 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) (Criminal Code Act);
  • Three counts of insider trading, by trading in foreign exchange derivatives while in possession of inside information not generally available to the public, contrary to sections 1043A(1)(c) and 1311(1) of theCorporations Act;
  • 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 the Criminal Code Act.
  • 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.

He is scheduled to appear in Melbourne Magistrates Court.

The 24-year-old Belconnen man was charged with 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 section 1311(1) of the Corporations Actin that they contravened section 1043A(1)(c) of the Corporations Act.
  • One count of receiving a bribe as a Commonwealth public official, contrary to section 141.1(3)(a)(iii) of the Criminal Code Act;
  • One count of abuse of public office to dishonestly obtain a benefit, contrary to section 142.2(1)(b)(i) of the Criminal Code Act;
  • 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.

He is scheduled to appear in Canberra Magistrates Court.

More information is available from ASIC.

ACCC acts on beer labelling

The Australian Competition and Consumer Commission has accepted a court enforceable undertaking from Carlton & United Breweries (CUB) in relation to ACCC concerns that it represented that Byron Bay Pale Lager was brewed by a small brewer in Byron Bay when this was not the case.

CUB has also paid two Infringement Notices to the value of $20,400 in relation to this conduct.

In 2013, CUB began supplying Byron Bay Pale Lager with labelling that incorporated the name Byron Bay Pale Lager, a pictorial representation of a lighthouse, text regarding Byron Bay and a map of the Byron Bay region showing the location of the Byron Bay Brewing Company. In fact, the beer was brewed by CUB at its brewery in Warnervale, some 630km away from Byron Bay.

The Byron Bay Brewing Company is a small brewery that, via its parent, licensed to CUB the right to supply Byron Bay Pale Lager Australia wide. The Byron Bay Brewing Company only brews Byron Bay Pale Lager for sale on tap at its site in Byron Bay.

“Many small brewers cater to consumers who prefer to support small, niche businesses. When large companies portray themselves as small businesses, it undermines the unique selling point that such small businesses depend upon, and it misleads consumers,” ACCC Chairman Rod Sims said.

“The ACCC will be writing to other participants putting them on notice of this matter in order to ensure that marketing and labelling in the beer market appropriately reflects where and by whom beer is brewed.”

In providing the enforceable undertaking, CUB acknowledged that the labelling may have misled consumers. CUB has agreed to cease distribution of product with the misleading labelling. More generally, CUB has undertaken that it will not make false or misleading representations concerning the scale of the brewery in which its products are brewed or the place of origin of its products.

CUB will place corrective notices on its website and in trade publications, and it will also provide a corrective notice for retailers to display at point-of-sale.

“This is an outcome that protects the interests of both beer buyers and small brewers.” Mr Sims said.

More information is available from the ACCC.

CBA under fire at ASIC inquiry

Michael West at The Sydney Morning Herald reports on the attention directed at CBA at a senate inquiry currently underway.

Commonwealth Bank’s top lawyer, David Cohen, was rebuked before a senate inquiry on Thursday morning for downplaying systematic fraud within the bank’s financial services arm as ”inappropriate”.
The word ”inappropriate” was suitable to describe an error of judgment in clothing choice, said Mark Bishop, chairman of the Senate inquiry into the performance of the Australian Securities and Investments Commission, but not the fraud and failure within the bank’s wealth management division which culminated in clients losing millions of dollars in savings.
It was a gruelling day for the bank’s three top lawyers who fronted the senate panel following the testimony of Commonwealth Financial Planning (CFP) victims.

CBA are not the only party receiving attention.  The article goes on to say, that having taken three and a half years to respond to allegations of misconduct…

Officers from the corporate regulator are scheduled to appear on Thursday afternoon to explain why their response was belated and inadequate.

The full story is available from The Sydney Morning Herald.

Sailors sacked over Facebook posts

David Wroe reports in The Sydney Morning Herald on action facing six Navy sailors with regards to their posts in social media.

Up to six Navy sailors have been sacked or ordered to justify their jobs over racist and anti-Muslim Facebook posts.

The article continues…

“Several sailors have had their employment terminated or have been issued with notices of cause for termination,” Vice Admiral Griggs said.
“Others have received a range of disciplinary punishments or other administrative sanctions.”
It is understood that at least three, and possibly as many as six, sailors have been sacked or ordered to show cause whey they should not be sacked.

The full story is available from The Sydney Morning Herald.

Milk wars: Coles admits to errors in ad campaign

Esther Han reports in The Sydney Morning Herald on how supermarket giant Coles is undertaking to correct claims made in a social media advertising campaign that it has admitted to the Australian Competition and Consumer Commission “would be likely to have” breached consumer law that prohibits misleading and deceptive conduct.

Coles spruiked a rosy picture of the dairy industry at the height of the $1 milk wars last year using data it could not substantiate, the consumer watchdog has found.

The supermarket giant has conceded it relied on figures that could not be proven when it claimed that shaving the price of a two-litre milk container from $2.41 to $2 early last year would increase farm-gate prices for producers and lift national dairy production.

Coles has agreed to correct the claims, admitting to the Australian Competition and Consumer Commission that its social media advertising blitz “would be likely to have” breached consumer law that prohibits misleading and deceptive conduct.

The full story is available from The Sydney Morning Herald.

Amendments to the Privacy Act take effect this week

Peter Clark has quite a few posts covering amendments to the Australian Privacy Act that come into effect this week.

This Wednesday the amendments to the Privacy Act 1988 take effect.  They should require a significant change to the manner in which privacy is regulated in Australia by the Privacy Commissioner.  He has been given significant and varied enforcement powers.  And the penalties for serious interferences with privacy, $340,000 for an individual and $1,700,000 for a company, and breaches of the Credit Reporting provisions of the Act (Part IIIA) are very significant.  The question is, and has always been, how active and effective the regulator will be.  Part of the problem in the past has been the opaque way complaints have been processed and the lack of understanding of the criteria used in not investigating complaints and and the relative lethargy of the office in the past, under previous occupants of the position. Given the gatekeeper role the Privacy Commissioner has under the Act this effects how effectively and assertively the Act is regulated, or otherwise.  It is a flaw in the structure of privacy legislation. Except for section 98 and the very limited circumstances of sections 90-91 any complaint has to be referred to the Privacy Commissioner (assuming no dispute resolution process is in place) and that office has the sole authority to bring civil penalty actions.  Unlike the Corporations Act where ASIC has powers as does an individual or company with standing to bring an action for breaches or the Consumer legislation where the ACCC and individuals can bring actions.
What actions has your organisation taken in relation to these amendments?  Have you updated your relevant policies and informed your staff?  Do you know they are aware of and understand how the changes affect them?

Twitter users can be held to account for their comments

An article by Michaela Whitbourn on The Sydney Morning Herald looks how recent cases have shown that amateur publishers can be held to account for their comments.

As the internet makes a media mogul of any person with a smartphone, tablet or computer, the defamation battles that were once waged only against well-resourced media companies are being fought on new ground.

Andrew Farley, a former student at Orange High School, found this out the hard way.

Farley did not have the benefit of editors, subeditors and lawyers vetting his posts when he made defamatory comments about music teacher Christine Mickle to about 50 Facebook friends and 60 Twitter followers.

Mickle sued him for defamation and, in an unpublished judgment in November that only came to light this week, he was ordered by the NSW District Court to pay $105,000 in damages. He has since declared bankruptcy.

Read more: Cases against Andrew Farley, Mike Kelly and Marieke Hardy show that Twitter users can be held to account for their comments

85% Of Electronics Retailers Ignore Australian Consumer Law: CHOICE

An article by Chris Jager over at lifehacker concerning a CHOICE investigation into the application of Australian Consumer Law illustrates how a lack of knowledge may be exposing major retailers and their staff to significant penalties:

The vast majority of staff at Australia’s major electronics retailers are pretty clueless when it comes to consumer rights, according to a new investigation by CHOICE. The consumer watchdog discovered widespread violations of Australian consumer law across 85 per cent of Harvey Norman, The Good Guys and JB Hi-Fi stores around the country.

During its investigation, CHOICE visited 80 Harvey Norman, The Good Guys and JB Hi-Fi stores across all Australian states and territories while posing as regular customers inquiring about the return of big ticket items. A whopping 85 per cent of sales staff were found to have limited or no understanding of their obligations under Australian consumer law.

In addition, every staff member that CHOICE spoke to attempted to sell an extended warranty, despite the fact that Australian retailers can’t impose an arbitrary period on when warranty support is available — instead, goods are expected to operate for a reasonable length of time.

For the full story see 85% Of Electronics Retailers Ignore Australian Consumer Law: CHOICE

It is interesting to note how the extended warranties are offered all of the time when there is an upside of increased sales commission, but how a lack of knowledge may actually be exposing these individuals and companies to a more significant downside in relation to penalties relating to breaches of Australian Consumer Law.  What are you doing to ensure you are not exposed to such penalties?

HP to pay $3 million for misleading consumers and retailers

The Federal Court today ordered Hewlett-Packard Australia (HP) to pay a $3 million civil pecuniary penalty for making false or misleading representations to customers and retailers regarding consumer guarantee rights.

The Australian Competition and Consumer Commission instituted proceedings against HP on 16 October 2012. Subsequently, the ACCC and HP came to an agreed settlement on the matter.

The Court found, based on the parties’ agreed facts, that HP made a number of false or misleading representations to consumers about their consumer guarantee rights, including that:

  • the remedies available to consumers were limited to the remedies available at HP’s discretion;
  • consumers were required to have their product repaired multiple times before they were entitled to a replacement;
  • the warranty period for HP products was limited to a specified express warranty period;
  • consumers were required to pay for remedies outside the express warranty period; and
  • products purchased online could only be returned to HP at HP’s sole discretion.

In addition, the Court found that HP represented to retailers that it was not liable to indemnify the retailer if the retailer failed to obtain authorisation from HP before giving a consumer a refund or replacement.

The full story is available from the Australian Competition & Consumer Commission.

Townsville City Council PolicyPoint Case Study

Since 2008 when the local government entities of Townsville City Council, NQ Water and Thuringowa City Council amalgamated to form the new Townsville City Council, PolicyPoint has been helping the Council meet its employee training and corporate governance commitments.

With more than 1700 employees, Townsville City Council services 175,000 residents across 3,700 square kilometres of far North Queensland. The Council provides a wide range of services including infrastructure, water, parks, waste, leisure and public works.

In the lead-up to the amalgamation, a comprehensive review of Council policies was undertaken. When the new Council came into being, Council management needed to ensure that the organisation’s core policies and procedures were understood by all employees.

“Each of the three organisations that became amalgamated had their own sets of policies and procedures, all of which had to be reviewed to determine their appropriateness for the amalgamated Council”, said Geraldine Wood, Executive Manager Corporate Governance, Townsville City Council. “There was a lot of potential for confusion and uncertainty amongst staff when the new Council was formed; in particular there was the risk that employees would find themselves working under  policies that were obsolete, incorrect or unexplained.”

Rather than opt for an in-house solution, Townsville Council installed PolicyPoint Enterprise, a complete policy compliance solution that allows an organisation to distribute policy information, capture staff members’ acknowledgement of relevant policies and test for understanding.

“When the new Townsville Council was created we required a policy awareness program for all employees – we regard a program of this type as one of the central building blocks of good governance”,. “The PolicyPoint system impressed us as a solution that would easily enable staff to know what our policy direction is with regards to the job role they occupy.

“It is important that the Council maintain high standards when it comes to our corporate culture. As with any local government we are funded by the public and we are accountable to the ratepayers; accordingly all our staff need to know what we stand for and what is required of them.”

The PolicyPoint solution forms part of every new employee’s induction program as well as ongoing training. Council policies are broken down into categories with many being department-specific, for example finance, roads and engineering etc. Policies that need to be understood by all employees cover such areas as codes of conduct, the environment and workplace health and safety. For many policies – for example electrical safety – there is a legal requirement for all employees to be aware of them.

Approximately every two weeks a new staff member logs onto PolicyPoint via the Council’s intranet and is introduced to a new set of policies. After reading over the policies the user answers a handful of multiple choice questions to verify their understanding of them. As new policies are introduced new PolicyPoint modules are created for staff members to respond to.

“The PolicyPoint system has enabled us to avoid a situation where new employees are bombarded with Council policy material”, said Ms Wood. “PolicyPoint allows us to pace the policy education process steadily, allowing employees the best opportunity to understand the Council’s guidelines, policies and procedures and how their job responsibilities relate to them.”

Since PolicyPoint was installed there has not been an incident whereby an employee’s ignorance of a policy has produced harmful consequences for the Council.

“As a risk management tool PolicyPoint has proved its worth as is evident by the lack of any serious policy breaches”, said Ms Wood. “From a monitoring and verification perspective PolicyPoint is also proving effective. There have been a few occasions where an employee has claimed they were unaware of a particular policy, but in response we have been able to point to their completion of the relevant policy module to determine that that was not the case.”

The PolicyPoint system has been well-received by employees, as Ms Wood explains: “PolicyPoint has gained widespread positive acceptance amongst staff, which is very pleasing”, she said. “The ongoing task of learning and being tested on Council policies is effective without placing an onerous burden on staff members. For the vast majority of our employees meeting their PolicyPoint obligations is a stress-free part of their job.”

Looking towards the future, Townsville City Council plans to stick with PolicyPoint as its policy management solution.

“PolicyPoint is doing exactly what we expected of it”, said Ms Wood. “Importantly the customer support we have received from PolicyPoint has been first-class from day one. The professionals at PolicyPoint are very tuned in to our needs and objectives and they have developed a strong relationship with the Council. In the immediate future there is potential to expand our use of PolicyPoint particularly with regards to training.”