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Costello warns A.S.C. not to repeat the errors of the past

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PARLIAMENT HOUSE. CANBERRA. ACT. 2600. SUITE R 2 117 PHONE (062) 77 4750 PAX (062) 77 2124 20 BEATTY AVENUE. ARMADA EE, VIC. 3143 PHONE (03) 822 4422 PAX (03) 822 0310



Costello warns A.S.C. not to repeat the errors of the past.

Shadow Minister for Corporate Law Reform and Consumer Affairs, Mr Peter Costello, today urged the Australian Securities Commission not to repeat the mistakes of the N.C.S.C. which he said "had been over-zealous in using the press as an arm of corporate law enforcement during the 1980s." Mr Costello was commenting on the acquittal of David de Greenlaw on insider trading charges yesterday.

David de Greenlaw was arrested and charged with insider trading after a dawn raid in March 1989. Newspapers and Television gave the event extensive coverage, and corporate regulators apparently briefed the press concerning the matter. Mr Costello said: "it was surprising that the prosecuting authorities saw fit to make an arrest in a "Dawn Swoop" after an investigation which had taken som e months, where the defendants were well aware the investigation was proceeding and where they had taken no steps to abscond. The arrest added to the drama of the event and clearly

generated greater publicity than would otherwise have occurred."

Yesterday a jury took less than two hours to acquit Mr de Greenlaw of the charges.

Mr Costello said "the N.C.S.C. made no bones of the fact that in the late 1980s it was prepared to use the press to target activities it considered illegal. It is the duty of corporate regulators to enforce the law by bringing charges in courts rather than media publicity."

Mr Costello said that "the Australian Securities Commission should learn from the errors of the N.C.S.C. It should resist the temptation to pursue corporate malpractice through press coverage which may be easier, but in order to afford proper protection to the innocent and build confidence in the administration of justice, charges should

be brought in the Courts and every care taken to observe the rules of natural justice."

Mr Costello said "corporate regulation was hampered by insufficient resources and insufficient commitment from the government during the term of the Hawke Government. These failures need to be addressed, but there is no warrant for efforts to change the law to secure convictions for the sake of convictions. The acquittal of

Mr de Greenlaw shows that a properly instructed jury is able to balance the rights of the community and the individual. It does not prove the case for abolishing juries. The law should clearly proscribe anti-social activities but the prosecution of cases should be done in a way that is procedurally fair."

Ends: 19 February 1991. Contact: Anthony Smith (06) 277 4750 or (A) 018 324 009



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Three people charged with Insider trading were part of a major network that could have had a turnover of up to SI00 million in illegal stock deals, the Melbourne

Magistrates' Court was told today. Prosecutor Mr Shane New­ ton told the court that up to 50 people and 100 major Austra-

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parties could be involved in the offences. He said the defendants, two men and a woman, could have had a turnover of up to S20 million in the deals.

Their arrests followed dawn raids early today by officers from the Corporate Affairs Commission, the fraud squad and the National Companies

and Securities Commission. The charges were the first involving alleged insider trad­ ing in Victoria. Today's arrests form part of a national in­ vestigation into illegal stock dealing.

Mr Newton said the defen­ dants had known each other for some years. Those charged are Robert

Prowse. Yazm Soma Ariff and David De Greeniaw. Prowse. a finance executive with the Pratt Group, is

charged with two offences. Ariff. an unemployed stock­ broker. faces seven charges

and De Greenlaw, who former-

insider trading involves trad­ ing in shares on the basis of information which is not available to the public. It is covered by provisions of the Securities Industry Code.

A c c o r d in g to c u rren t

legislation, an act can be re­ garded as “insider trading" when a company director, or another officer of the com­ pany, deliberately gives share- sen sitiv e information not publicly available ιο a person for the direct purpose of deal­ ing in those shares.

iy ran the Melbourne office of a Sydney-based stockbroking firm, also faces two charges. The three were released on

their own undertaking and or­ dered to surrender their pass­ ports by the magistrate, Mr Raphael Barberio.

The defence counsel had opposed a police application to release the three defendants on 520.000 bail.

Mr John Barnett, for Prowse, said it was ridiculous to set such a high sum as the three had been under investigation since September and had co­ operated with the police.

He said the maximum penal­ ty his client was facing was a 520.000 fine or five years’ jail. Mr Ross Ray. for De Green­ law, said he was worried about the effect of publicity on his client due to the "flamboyant" claims of profit being made in

court. He said his client dealt with S100 million a year and out of that he might only make

510,000 or S20.000 profit and as such the alleged offences were not as dramatic as they

sounded. Mr Newton said Ariff, who was charged two weeks ago with other insider trading off­

ences, could have made up to S 100.000 profit from the deals. ' He said that during_ her time as an employee of Tricon­

tinental anti Australian Amer­ ican Assurance Ltd she had used inside information to buy shares in different companies.

At AAA she worked with De Greenlaw and together they bought and sold shares at a profit, at one stage selling them back to their employers.

Mr Newton said AAA had a S570 million portfolio and De Greenlaw may have made up to $250,000 profit from the deals.

He said Prowse had also worked for Tricontinental and then joined the Pratt Group, where it is believed he made

more than S250.000. He said the three would now be unemployable. All three had been kept in the City Watchhouse since 8 am today.

Sgt Peter Coleman, a fraud squad officer attached to the Corporate Affairs Commission, said it was possible that more arrests would be made in the I next few --------------



A senior officer from the CAC, which is conducting the Melbourne end of the in­ vestigations on behalf of the NCSC, told The Herald more

arrests were expected within the next few weeks. Insider trading, a problem which has occupied much of

the NCSC's time and attention during the oast 12 months, recently hit the headlines with the suicide of former Sydney stockbroker Dr Ian Story.

Dr Story, who was facing charges connected with trad­ ing in the shares of Australian United Gold, is believed to have killed himself early last

Saturday morning. He was about to appear on charges relating to alleged breaches of the Securities In­ dustry Code. r

Ye s t e r d a y , t ne NCSC

announced a 50 per cent boosv ir. staff and resources for a maior crackdown or. company

'"fhe State and Federal Attor- neys-General meeting in Mel­ bourne approved 40 more staff, adding an extra S4 million to

the NCSC's budget. It will now have 78 staff and a I budget of around S6 m illion.^