Banking royal commission: Hayne ‘insider trading’ probed

The corporate watchdog will investigate whether insider trading led to investors making $22 million off the Hayne report.

Commissioner Kenneth Hayne.

The corporate watchdog will ­assess claims that financial markets investors made a $22 million profit from trading on insider information contained in Kenneth Hayne’s royal commission final report, despite senior regulators doubting the veracity of the claim.

Labor and the Greens have sought to pile political pressure on the government over insider trading claims, which opposition fin­ancial services spokeswoman Clare O’Neil said were written by a “respected economic commentator” on the online news site The New Daily, which is operated by industry super fund sector ­umbrella group Industry Super Holdings.

The allegations centre on a substantial $500m purchase of shares in the major banks at 11am on Monday — ahead of the release of the royal commission report later that day — the buyers of which would have supposedly benefited to the tune of $22m when the major bank shares surged on Tuesday.

Ms O’Neil has asked the secretary of the Department of Prime Minister and Cabinet, Martin Parkinson, the Australian Securities Exchange and the Australian Sec­urities & Investments Commission to investigate the claims.

Senior sources at financial market regulators are sceptical of the claims but will likely be forced to investigate the matter.

“There wasn’t even anything on Hotcopper,” one regulator source told The Australian, a reference to the enduring online investment forum where rumours and speculation about share price movements are rife.

On Tuesday, shares in the major lenders all surged about 5 per cent.

While the major bank stocks rose about 1 per cent each on Monday morning, the increase in the shares coincided with the opening of the Japanese sharemarket, where Japan’s major bank stocks also rose — suggesting the increase of financial stocks was related to favourable global economic data released at the weekend.

However, shares in AMP and IOOF, which both rallied on Tuesday after the release of the report, did not enjoy any benefit from ­potential insider trading, with both stocks falling on Monday.

Mortgage broker shares were also unaffected by any supposed inside information on Monday, but stocks in the country’s two largest brokers, Mortgage Choice and Australian Finance Group, crashed more than 25 per cent on Tuesday.

Financial market sources suggested some of the rise in bank shares on Monday was attrib­utable to “covering” for short-­selling bets.

Short-interest in the major banks was close to five-year highs ahead of the release of the report, and fund managers were likely to take out “insurance” against any possible rise in the shares by “covering” their short positions with long bets on the lenders.