* Pair netted $6.5 mln from early release of ABS data
* Rumours had persisted in market about possible leaks
* NAB employee did not use bank funds or systems
(Adds detail on alleged activity, charges, comment from ABS)
By Jane Wardell and Wayne Cole
SYDNEY, May 9 An Australian Bureau of Statistics
(ABS) employee and a National Australia Bank employee
have been arrested over insider trading offences that
authorities said netted them A$7 million ($6.5 million) on the
foreign exchange derivatives market.
The Australian Federal Police (AFP) said the pair will be
formally charged in court on Friday with offences ranging from
abuse of public office to corruption.
Police said the NAB employee, a 26-year-old Melbourne man,
had obtained information about retail trade and jobs data from a
24-year-old ABS staff member.
"He obtained market sensitive information that had at that
stage not been released by the ABS and he used that information
to enter into foreign exchange derivatives," AFP Acting
Assistant Commissioner Ian McCartney told a news conference in
"In effect, he utilised sensitive ABS information to predict
the fluctuations in the Australian dollar."
The alleged fraudulent activity took place between August
2013 and May 2014, with the pair identified following a joint
investigation by the AFP and the Australian Securities and
Investments Commission (ASIC).
Police have frozen around A$6.5 million in various funds and
accounts, and impounded A$500,000 in residential property and a
A$15,000 motor vehicle.
The ABS said it had suspended its arrested staff member and
had launched an internal review of its systems.
NAB said it had fired the employee and stressed none of the
bank's money or customers were involved.
"While I can't talk about the details of the charges, I can
say that the activity alleged by authorities is unlawful and
completely unacceptable to NAB and our core values of doing the
right thing by our customers, our shareholders and our staff,"
NAB Group CEO Cameron Clyne said.
Tens of billions of dollars change hands in the wake of
major Australian data releases, from foreign exchange to bonds
and interest rate futures. Fortunes can be made or lost in
milliseconds, particularly if the numbers show a change outside
of market expectations.
The employment report is particularly influential given its
importance for monetary policy, and its habit of surprising. The
report for February, for instance, showed employment jumped by
over 45,000 and far above market expectations, sending the local
dollar surging over a half a U.S. cent in an instant.
Traders have heard vague rumours for some time that orders
correctly anticipating the market reaction were going through
just before the ABS data hit dealing screens, stirring
suspicions that someone had inside knowledge.
"I can't recall anything like this happening before, and
it's very embarrassing for the ABS. It'll make people think
twice before trading on the economic data," said one economist,
who asked not to be identified due to the sensitive nature of
The ABS said no other staff members were suspected of
involvement and it was committed to ensuring "a strict embargo
for the release of statistics to ensure no one can obtain an
inappropriate advantage from early access."
ASIC said its investigation revealed the two men knew each
other in university. ASIC said the majority of the proceedings
went to the NAB employee.
The NAB employee will be charged with insider trading,
corruption of a public official and money laundering.
The ABS employee will be charged with insider trading,
receiving a corrupt benefit, release of sensitive information
and abuse of public office.
($1 = 1.0670 Australian Dollars)
(Reporting By Jane Wardell; Editing by Richard Pullin & Kim