Australia's corporate regulator filed a federal court action yesterday accusing the local subsidiary of global investment giant Citigroup of insider trading.
The Australian Securities and Investments Commission (ASIC) filed a civil suit alleging Citigroup Global Markets Australia engaged in "unconscionable conduct" while it was advising logistics firm Toll Holdings Ltd in a A$5.5 billion (US$3.96 billion) takeover bid for ports operator Patrick Corp.
ASIC said Citigroup engaged in "substantial proprietary trading" -- trading for their own account or benefit -- in Patrick Corp shares on August 19, last year, the business day before Toll announced its hostile bid for the rival company.
Citigroup, one of the world's largest financial services conglomerates, strongly denied the charges and accused ASIC of trying to regulate the proprietary trading desks of major investment banks.
In its court submission, ASIC alleged Citigroup did not have adequate arrangements in place to avoid conflicts of interest between itself and Toll.
"ASIC alleges that Citigroup traded on inside information and directly against the interests of its client," ASIC Deputy Chairman Jeremy Cooper said.
The regulator demanded that Citigroup admit it violated conflict of interest and insider trading provisions of the Corporations Act and implement measures to prevent any future breaches of the law.
It also sought a restraining order preventing Citigroup from trading on its own account in shares linked to its clients and demanded it pay a fine of up to A$1 million.
Cooper called the suit a "significant case" concerning conflict of interest and insider trading in the securities industry.
"ASIC is saying that Citigroup fell down on both fronts in relation to its role as adviser to Toll," he said.
Citigroup responded that it was "disappointed" by ASIC's action.
"Citigroup does not believe ASIC has any basis of a claim and that this is an attempt to regulate the proprietary trading desks which are a feature of all major investment banks," it said in a statement. "Citigroup is denying all charges made by ASIC."
The case will be back before the Federal Court in Sydney on April 28.
Toll Holdings reaffirmed its confidence in Citigroup as its adviser and said the ASIC case would not impact on its takeover bid for Patrick, which is due to close on April 28.
Toll initially bid A$4.6 billion for Patrick on August 22 in a combined cash and scrip offer which amounted to A$6.70 for each Patrick share.
The Patrick shares had spiked in price the previous Friday when Citigroup was buying stock, rising from A$5.77 to A$6.45 per share.
Last week Toll lifted its bid to an equivalent of A$7.82 dollars per Patrick share.
Friday shares in both firms were down, with Toll falling A$0.14 or 1.06 percent to 13.10 and Patrick losing A$0.60 or 0.74 percent to A$8.06. The broader market was 0.29 percent higher.
ROLLER-COASTER RIDE: More than five earthquakes ranging from magnitude 4.4 to 5.5 on the Richter scale shook eastern Taiwan in rapid succession yesterday afternoon Back-to-back weather fronts are forecast to hit Taiwan this week, resulting in rain across the nation in the coming days, the Central Weather Administration said yesterday, as it also warned residents in mountainous regions to be wary of landslides and rockfalls. As the first front approached, sporadic rainfall began in central and northern parts of Taiwan yesterday, the agency said, adding that rain is forecast to intensify in those regions today, while brief showers would also affect other parts of the nation. A second weather system is forecast to arrive on Thursday, bringing additional rain to the whole nation until Sunday, it
CONDITIONAL: The PRC imposes secret requirements that the funding it provides cannot be spent in states with diplomatic relations with Taiwan, Emma Reilly said China has been bribing UN officials to obtain “special benefits” and to block funding from countries that have diplomatic ties with Taiwan, a former UN employee told the British House of Commons on Tuesday. At a House of Commons Foreign Affairs Committee hearing into “international relations within the multilateral system,” former Office of the UN High Commissioner for Human Rights (OHCHR) employee Emma Reilly said in a written statement that “Beijing paid bribes to the two successive Presidents of the [UN] General Assembly” during the two-year negotiation of the Sustainable Development Goals. Another way China exercises influence within the UN Secretariat is
CHINA REACTS: The patrol and reconnaissance plane ‘transited the Taiwan Strait in international airspace,’ the 7th Fleet said, while Taipei said it saw nothing unusual The US 7th Fleet yesterday said that a US Navy P-8A Poseidon flew through the Taiwan Strait, a day after US and Chinese defense heads held their first talks since November 2022 in an effort to reduce regional tensions. The patrol and reconnaissance plane “transited the Taiwan Strait in international airspace,” the 7th Fleet said in a news release. “By operating within the Taiwan Strait in accordance with international law, the United States upholds the navigational rights and freedoms of all nations.” In a separate statement, the Ministry of National Defense said that it monitored nearby waters and airspace as the aircraft
Taiwan’s first drag queen to compete on the internationally acclaimed RuPaul’s Drag Race, Nymphia Wind (妮妃雅), was on Friday crowned the “Next Drag Superstar.” Dressed in a sparkling banana dress, Nymphia Wind swept onto the stage for the final, and stole the show. “Taiwan this is for you,” she said right after show host RuPaul announced her as the winner. “To those who feel like they don’t belong, just remember to live fearlessly and to live their truth,” she said on stage. One of the frontrunners for the past 15 episodes, the 28-year-old breezed through to the final after weeks of showcasing her unique