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Investors sue Macquarie for Chan trades

John Kehoe        The Australian Financial Review           UPDATED: 05 Apr 2012

Macquarie Group is being sued for $10 million by a consortium of international investors in connection with the illegal trading of shares by its disgraced former stockbroker Newton Chan.

 

Macquarie is accused by law firm Slater & Gordon of engaging in market manipulation, due to the convicted broker’s illegal trading in shares of the defunct payment technology company Bill Express.

A spokeswoman for Macquarie said it was aware of the claim and believed it was “totally fanciful”.

In 2007, two companies from Saudi Arabia formed a joint venture, Ipay Express, to buy shares in Bill Express.

Macquarie acted as the broker to buy the shares.

The consortium, comprising Al Othman Holding and Voice & Data Telecommunication, alleges that $9.5 million of shares in Bill Express and its parent company, OnQ Group, were bought on the advice of Chan, then Macquarie Equities senior client adviser.

Chan, who no longer works for Macquarie, was jailed for four months in 2010 for manipulating the share price of Bill Express.

The Supreme Court of Victoria found Chan used multiple trading accounts under different names and companies to ­enter 344 trades ­between 2006 and 2008 to help drive up the share price of Bill Express.

A statement of claim filed in the NSW Federal Court on Wednesday, claims Macquarie was responsible for Chan’s illegal trading of Bill Express stock, which had the effect of “propping up” its share price.

As a result, Ipay Express says it paid a higher price for the shares.

In 2008, Bill Express and OnQ were suspended from the Australian Securities Exchange and both are in liquidation. Slater & Gordon lawyer Vicky Antzoulatos said it is alleged that by reason of the broker’s conduct, Macquarie engaged in market manipulation in breach of the Corporations Act.

“Our clients are seeking to establish that Macquarie, the holder of the Australian Financial Services licence under which the broker operated, is responsible for [Chan’s] illegal behaviour,” Ms Antzoulatos said.

Last modified onTuesday, 28 May 2013 09:24

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