TWO of three men who had been friends for years pleaded guilty on Tuesday to insider trading in illegal trades worth 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.
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 Mr Khoo was working as an investment banking associate at the Royal Bank of Canada (RBC) in Sydney.
It was while at RBC that Mr 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.
Mr Khoo pleaded guilty on Tuesday to four charges of communicating some or all of that inside information to his friends Mr Tan and Mr Luong.
It is alleged that Mr 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 it is alleged Mr Tan made a total gross profit of $85,230.
It is not alleged that Mr Khoo received any financial reward in return for providing Mr Tan with information which led to trades.
Mr Khoo and Mr Tan have known each other for about 15 years.
They were at high school together and they lived together between 2007 and 2010.
Mr Khoo was the best man at Mr Tan's wedding in 2011.
Investigations by the Australian Securities and Investments Commission are continuing into Mr David Luong.
But according to the statement of facts tendered to the court, Mr Luong used information provided by Mr Khoo to acquire financial products relating to Macarthur Coal worth $49,672.20.
As a result, Mr 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 Mr Luong.
Since a relatively early stage in its investigation of the offences referred to in the statement of facts, Mr Khoo has provided a high level of co-operation with ASIC.