Insider trading charges likely

By GEOFF SENESCALL

Wellington police are understood to be confident of prosecuting the former employee of the Government Superannuation Fund for alleged insider trading.

A decision is expected to be made within a week and may also include the involvement of the Serious Fraud Office.

Yesterday, the police would confirm only that Detective Senior Sergeant Hugh Macrae and a forensic accountant are investigating the employee.

The matter was brought to the attention of the police by the super fund, which had taken disciplinary action against the staff member before dismissing him.

It is believed that the police, in a bid to discover more about the alleged insider dealings, questioned the broking firm Ord Minnett, which had taken a foreign currency order from him in good faith.

In response to a Herald article yesterday the Ministry of Economic Development, which oversees the super fund, acknowledged that the staff member had profited from his actions. "Investigations revealed the staff member's personal transaction resulted in a profit of $US40,500 [$87,000]."

However, financial market sources claim the amount was much more. The speculation is that more people may have been involved and other brokers used.

The gains were apparently made by buying the dollar low and cashing in on information that the fund was about to buy Government bonds linked to the trade-weighted index which would push the currency higher.

Attempts to contact parties involved in the dealing brought no comments.

However, Ord Minnett director Colin Churchouse did want to put the record straight on one matter: he said the firm had not passed any query made to it about the transaction on to anyone.

It is not a criminal offence to take advantage of insider information in this country although there are civil remedies to recover losses.

Police may investigate under the little-used Secret Commissions Act.