SYDNEY (AFP) - An Australian court on Wednesday cleared Citigroup of insider trading charges brought against the world's biggest bank by the local corporate regulator. ADVERTISEMENT



The Australian Securities and Investments Commission (ASIC) had accused Citigroup's Australian arm of insider trading and failing to manage a conflict of interest over stock trades in logistics firm Patrick Corp in August 2005.

ASIC charged Citigroup after one arm of the bank bought Patrick shares while another was helping organise a takeover of the firm, in a case that had the potential to set a new precedent on the way investment banks deal.

Citibank was advising bidder Toll Holdings on the takeover and ASIC alleged it had inside information when one of its traders bought Patrick shares a day before the bid was announced.

The Federal Court in Sydney dismissed the charges, saying Citigroup had adequate safeguards in place to ensure the trader who bought the Patrick shares knew nothing about the upcoming takeover.

"Citigroup had in place, inter alia, Chinese walls which insulated the trader from the information so as to satisfy the requirements of section 1043F of the Corporations Act," judge Peter Jacobsen said.

Citigroup welcomed the decision, which came 15 months after the charges were originally laid.

"Citi Australia is pleased with the outcome handed down today by the Federal Court in Australia in the case against Citigroup Global Markets Australia," it said in a statement.

"Citi Australia looks forward to continuing to work with ASIC and the industry to develop and uphold a well regulated market for financial services in Australia."