Pair plead guilty to illegal trades valued at $250,000
THE three men had been friends for years, but on Tuesday two of them pleaded guilty to insider trading in illegal trades valued at more than $250,000 - the latest in a series of similar cases brought by the corporate regulator.
John Kay Jin Khoo, a former investment banker with global bank Royal Bank of Canada, and day trader Jia Yao Mathew Tan, appeared in Sydney's Downing Centre Local Court and pleaded guilty to insider trading charges.
The third man, who was identified in the statement of facts tendered to the court as David Thien Anh Luong, is still being investigated.
The alleged offences occurred between 2010 and mid-2011, when Khoo was working as an investment banking associate at the Royal Bank of Canada in Sydney.
It was there that Khoo gained information on takeovers and acquisitions in the resources sector, including:
■ The proposed acquisition of Macarthur Coal Limited, by Peabody Energy Corporation and ArcelorMittal SA in 2011.
■ The proposed takeover of Caledon Resources PLC, by Guangdong Rising Assets Management Co in 2010.
■ The proposed takeover of Mantra Resources by JSC Atomredmetzoloto in 2010.
Khoo pleaded guilty on Tuesday to four charges of communicating some or all of that inside information to his friends Tan and Luong.
It is alleged that Tan, who has worked as a "day trader" since early 2008, used that information to acquire and to profit from a large number of shares and financial derivatives products known as "contracts for difference", or CFDs.
It is alleged that he used that information to acquire financial products relating to Macarthur, Caledon, and Mantra with a total value of $257,880.
As a result of those trades, it is alleged Tan made a total gross profit of $85,230.
It is not alleged that Khoo received any financial reward in return for providing Tan with information which led to the illegal trades.
Khoo and Tan have known each other for about 15 years, since attending high school together. They lived together between 2007 and 2010, and Khoo was the best man at Tan's wedding in 2011.
Investigations by the Australian Securities and Investments Commission are still ongoing into David Luong.
But according to the statement of facts tendered to the Court, Luong used information provided by Khoo to acquire financial products relating to Macarthur Coal worth $49,672.20.
As a result, Luong allegedly made a total gross profit of $24,987.80, by buying Macarthur shares and CFDs relating to Macarthur.
An ASIC spokesman said the corporate regulator had no comment on Luong.
It is understood that ASIC's investigation into Luong is continuing.