Former NAB Banker and Gov. Statistician Have Charges Amended in FX Insider Trading Scheme

In a developing story first broken by Forex Magnates back in May, we continue our coverage of one of the most intriguing insider trading cases involving a former NAB banker and government statistician working for the Australian Bureau of Statistics.

Cooperating in one of Australia’s largest insider trading schemes, Lukas Kamay and Christopher Hill were arrested in May 2014, with charges being filed over the past 3 months. The case has now gone to court at the Melbourne Magistrates' Court in Melbourne, Australia. Reporting from the scene, Forex Magnates has learned that prosecutors have amended charges in the ongoing court case heard yesterday.

According to court documents, it appears Mr. Hill’s lawyers are amending their case by claiming that Mr. Hill was unaware of the magnitude of profits earned by Mr. Kamay while the two were collaborating in the scheme.

Mr. Hill’s lawyers intend to argue that he is “therefore not as accountable for the offense." Forex Magnates has also learned that Mr. Kamay submitted a confession in July and that the pair intends to plead guilty on September 16th, 2014, when the case is expected to conclude - Magistrate Peter Reardon is presiding.

The Australian Federal Police (AFP) arrested the perpetrators in May 2014 after monitoring trades conducted by Mr. Kamay through foreign Exchange broker, Pepperstone Financial, based in Australia. The broker reported Mr. Kamay to the Australian Securities and Investments Commission (ASIC) soon after the ‘insider’ trades began in August 2013.

The Australian Federal Police allege Mr. Hill was in a unique position to obtain embargoed employment, trade and retail data as part of his duties at the Australian Bureau of Statistics, a government agency that collates data on the Australian economy.

Having passed on sensitive data to Mr. Kamay, it is alleged that the ex-NAB banker used the information to make trades from his mobile phone with the intention of avoiding suspicion and distancing his involvement in the trades.

The trades were conducted moments before the data was released to minimize potential loss with a view of securing the maximum possible profit given the unpredictability of market reactions to key economic data.

The market of choice in the alleged crimes was the Australian dollar v US dollar currency pair, traded in the currency markets by millions of traders. Being privy to macroeconomic data yet unknown to the wider market, allowed the pair to predict the likely reaction of other market participants when the figures were actually released. The trades placed by Mr. Kamay effectively had very little chance of losing. The irony simply glistens.

Having shared key macroeconomic statistics, the dynamic duo were allegedly able to generate substantial profits by placing timely trades on the FX market. In total, the trading activities conducted by Mr. Kamay, wielding data supplied by Mr. Hill, earned the pair over $7 million. With the case now in court, Mr. Kamay faces charges of insider trading, corruption of a public official and money laundering. Mr. Hill faces charges of insider trading and receiving a corrupt benefit.

It is becoming clear that either one or both alleged offenders want to distance themselves from blame and reduce the severity of the likely prison sentence they are likely to receive. Having met at Monash University and remaining friends throughout their careers in the financial markets, the final curtain on the Mr.Hill and Mr. Kamay friendship may just have fallen. One question on the tip of all seasoned traders' tongues right now is: "Have these guys ever seen Trading Places?"

As a consequence of events over the past 3 months, the individual who allegedly reported Mr.Kamay’s activities to ASIC, Joel Murphy, has left Pepperstone claiming he was dismissed for alerting the regulator[ASIC]. During the time of the alleged trading activities, Mr. Murphy was acting Head of Sales at Pepperstone. Having been dismissed from his post, he is now taking Pepperstone to court for unfair dismissal.

With the matter still ongoing and scheduled to be heard in Federal Court next Tuesday, Forex Magnates is unable to make further comment. However, we will continue to update our readers as and when we can legally do so.