Two men have been charged with insider trading and corruption by Australian Federal Police for using unreleased Australian Bureau of Statistics data to trade in Australian dollars.
In what must be one of Australia’s biggest insider trading frauds, the pair made a $7 million profit in just nine months.
One man, aged 24, from Belconnen, worked for the Australian Bureau of Statistics, in Canberra, the other, aged 26, from Clifton Hill, for the National Australia Bank in Melbourne. The two men were university friends and will be appearing in court this afternoon.
The market sensitive data was used before its official release to trade in margin foreign exchange derivatives, predicting movements in the AUD. The trades occurred between August 2013 and May 2014.
Australian Federal Police (AFP) and the Australian Securities and Investment Commission (ASIC) held a joint investigation after detecting irregularities in the online trading of Australian dollar derivatives.
“This has been a complex investigation,” said AFP Acting National Manager Crime Operations Ian McCartney.
McCartney stressed that no NAB facilities were used by the employee for the trades and thanked the bank for its co-operation during the investigation.
“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,” he said.
AFP officers executed eight search warrants this morning, seizing $9000 in cash, among other items, and arresting the two men.
The 26-year-old Melbourne man is facing a number of charges including conspiracy to engage in insider trading, giving a bribe to a Commonwealth public official, three counts of insider trading and dealing in proceeds of crime worth AU$1,000,000.
The charges facing the 24-year-old Canberra man include insider trading, receiving a bribe, abuse of public office, the release of sensitive information.
The market sensitive information included labour force, retail and trade figures.
There have long been suspicions in the market about data leakage ahead of important economic releases, because of rapid currency price action in the minutes before a data point is out.
One currency trader told Business Insider that the conspiracy uncovered by the AFP and ASIC is a problem the world over.
“You have people who have very valuable information the who are comparatively low paid. The temptation is obviously there,” the trader said.
“The other thing you see is that trading thins out just before a big data release because most guys have their strategies in place. Inside information at that point lets you inflict maximum damage.“
Meanwhile, the investigation into the actions of the two men is ongoing.
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