How to fail at insider trading

By on May 14, 2014

If you want to get caught insider trading make sure you are mates with your source on LinkedIn and Facebook, like an alleged insider trader in Australia was. Suspicious timing is also handy.

Any one indulging in illegal insider trading will know they need to cover their tracks if they have even the slightest chance of getting away with it. However, it didn’t occur to alleged insider trader Lukas Kamay that making big Australian dollar bets just before economic announcements and being friends with someone who works at the Australian Bureau of Statistics on LinkedIn and Facebook might look the teeniest bit suspicious.

The alleged R67.72 million scam was uncovered after a junior colleague alerted Owen Kerr, a foreign exchange broker with Pepperstone Financial in Australia, that Kamay, an associate director at National Australia Bank, was regularly making big bets on the Aussie dollar as little as 30 seconds before economic data was released.

Kerr checked Kamay’s LinkedIn and saw he’d been to Monash University with Christopher Hill, who worked at the Australian Bureau of Statistics. He passed the information to police, who looked at the two’s Facebooks and – surprise surprise – saw they were friends.

The two men were arrested and had their assets frozen, after nine months of surveillance with cameras and phone taps. These frozen assets included a R23 million loft apartment bought by Kamay that had been designed on a reality TV show. Kamay, 26, faces seven criminal charges and Hill, 24, five. Both have been released on bail.

“Kamay was taking quite decent size positions which were larger than his account size could sustain if they went the wrong way,” Kerr says, according to Business Insider. “So they were really an all-or-nothing bet and not something someone would normally rationally make.”

In short, the easiest way to get caught? By not acting normal.

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