Criminal association

A new LinkedIn best practice—don’t connect with your insider trading partner

May 12, 2014
May 12, 2014

If your college buddy is feeding you economic data ahead of its official release, it’s perhaps best to avoid publicly connecting with him on social networks. It was a LinkedIn connection that helped lead to the arrest of a National Australia Bank associate director who is charged with insider trading, the Age reports.

Lukas Kamay is accused of offering Christopher Hill, a college classmate and employee at the Australian Office of Statistics, a bribe of 50,000 Australian dollars to reveal information early. Hill provided confidential data on housing and building approval figures, among other things, which Kamay used to predict fluctuations in the Australian dollar, the authorities say. Kamay apparently made more than $5 million from his trades.

A foreign exchange broker, Owen Kerr, first made the connection between Kamay and Hill. One of his team members pointed out that Kamay was making big bets on the Australian dollar, sometimes minutes or seconds before economic news was announced. When Kerr looked up Kamay on his LinkedIn Premium account, and saw his college connection to Hill, he suspected that he must be getting ABS data early.

The type of bet looked particularly fishy. Kamay was taking positions bigger than his account size could take if they went wrong (which they didn’t). Kerr reported the issue to Australia’s federal police.

That initial LinkedIn discovery lead to an elaborate nine-month surveillance operation, run by the police and the Australian Securities & Investments Commission. Kamay’s brokers and both men’s employers were looped in and monitored the pair using surveillance cameras and phone taps. The two took some steps to conceal their actions, buying disposable phones and making intentional bets the wrong way, but by then it was too late. Both men were arrested on Friday. Kamay is facing six criminal charges, and Hill is facing five. Both are out on bail.

The case is a useful reminder, even for non-criminals, that it’s much harder to keep secrets in the age of social media. Kamay’s alleged behavior was suspicious and unsubtle enough that it may have eventually come to light. But the connection to Hill was evident to a third party within a few minutes, in a way that would have been extremely unlikely even a few years ago.

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