Securities and Investments Commission Versus Citigroup Global Markets

Question: Discuss about the Securities and Investments Commission Versus Citigroup Global Markets. Answer: Introduction Citigroup Global Market is a financial services company operating in Australia and carries out its business in circa 100 countries. It is the defendant in the proceedings of ASIC v Citigroup case. The primary question in the case is if the letter of engagement for retaining a bank by a great public organization to talk about the takeover bid left out the presence of any fiduciary association between the bank and its customers (Black, Mills Cox, 2007). Following the issue in this proceeding, this paper discusses the Courts decision in the case and the reasons for it in view of the Corporation Act. Courts Decision The findings of the Federal Court of Australia on Thursday 28 June 2007 about ASIC v. Citigroup case was that Citigroup failed to participate in insider trading and it did not also breach the conflict of interest provisions according to the Corporations Act (Jacobson, 2007). The first Insider Trading Claim failed. It could only succeed if the trading employee possessed the insider information and attributed his knowledge to the company. According to section 1042G(1)(a), the awareness of the staff got not associated to the enterprise unless the employee was an officer defined by section 9 of the law (Jacobson, 2007). The second Insider Trading Claim also did not succeed. According to the Courts findings, Citigroup adhered to section 1043F of the Act. It raised the Chinese Wall Defense in a satisfactory manner (Jacobson, 2007). The Fiduciary Claim also failed right at the beginning. This finding was so, because, the letter of engagement did not involve the existence of the fiduciary association. The Court had several reasons for these decisions. The Court did not come to an agreement with ASIC because, first, the employee in question was not an officer of Citigroup (Seeto, 2008). According to the Act, an officer was a person with a senior role in management, unlike the employee in the case. Secondly, the employee did not make the supposition of the takeover bid according to the claim by ASIC. Thirdly, the Company complied as it would be anticipated to make sure that the price sensitive data according to IB got not revealed to the Public Side employees or to ET. Fourthly, the choice to buy shares came from a person rather than the individuals who held the information and no communication of it concerning the purchase was given by IB (Seeto, 2008). Lastly, the Corporation Act did not hinder the bank from having a fiduciary duty when it started its connection with its clients (07-171 Decision, 2007). Conclusion Therefore, the case ASIC v Citigroup illustrates that according to the insider trading provisions, having an adequate compliance system is necessary because it can help a company and its members from liability. Besides, the fact that Chinese Walls confine the information from flowing between different divisions in a company, an organization can avoid damaging its reputation and substantial fines if it adheres to the requirements of the Chinese Wall, as well as its relevance schemes of compliance. References 07-171 Decision in ASIC v Citigroup | ASIC - Australian Securities and Investments Commission. (2007). Asic.gov.au. Retrieved 6 January 2017, from https://asic.gov.au/about-asic/media-centre/find-a-media-release/2007-releases/07-171-decision-in-asic-v-citigroup/ Black, A., Mills, K., Cox, B. (2007). A big win for banks. International Financial Law Review, 26(9), 12. Jacobson, J. (2007). Australian Securities and Investments Commission v Citigroup Global Markets. Australia Pty Limited (ACN 113 114 832) 2007 (pp. 1-130). Sydney. Retrieved from https://www.smh.com.au/pdf/ASICvCitigroup.pdf Seeto, G. (2008). ASIC v Citigroup - The compliance implications - Knowledge - Clayton Utz. Claytonutz.com. Retrieved 6 January 2017, from https://www.claytonutz.com/knowledge/2008/january/asic-v-citigroup-the-compliance-implications