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ARTICLE · 04 FEBRUARY 2008

ASIC v Citigroup - The Compliance Implications

Clayton Utz
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An effective compliance program is important in the prevention of insider trading.

AustraliaCorporate/Commercial Law
Greg Seeto
Greg Seeto
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Key Point

  • An effective compliance program is important in the prevention of insider trading.

In ASIC v Citigroup Global Markets Australia Pty Ltd (No 4) [2007] FCA 963, the Federal Court of Australia expressed two key principles:

  • The law does not prevent an investment bank from contracting out of fiduciary relationships in certain circumstances; and
  • The adequacy of "Chinese Wall" arrangements (also known as "information barriers") can determine liability for insider trading. In addition, the effectiveness of a company's compliance program is a factor the court will take into account when considering alleged breaches of the insider trading provisions.

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