Tuesday 04 July 2006 06 LAWFUEL – Press Release Service – Two of the…

Tuesday 04 July 2006 06 LAWFUEL – Press Release Service – Two of the former National Australia Bank (NAB) foreign currency options traders were today sentenced in the County Court of Victoria on charges brought by the Australian Securities and Investments Commission (ASIC). Mr David Matthew Bullen, 34 years old, of Eversley in Victoria, was sentenced to 44 months imprisonment to serve a minimum of 30 months in relation to 18 charges, and Mr Vincent Adam Ficarra, 27 years old, of Brunswick in Victoria, was sentenced to 28 months imprisonment to serve a minimum of 15 months on 13 charges. ASIC Chairman, Mr Jeffrey Lucy, said the sentences reflected the community’s expectations that company employees who engage in dishonest conduct that benefits them, at the expense of the company and its shareholders, will be brought to account. ‘This outcome demonstrates the serious consequences for company officers who breach their duties’, Mr Lucy said. ‘Mr Bullen and Mr Ficarra, together with two other colleagues, systematically and deliberately entered transactions, which they knew to be dishonest. There is no excuse for conduct of this nature, and shareholders have every right to expect company officers to act in the interests of the company. Their actions resulted in a significant loss of shareholder value’, he said. Mr Lucy noted that the sentences of Messrs Bullen and Ficarra reflected that, unlike the sentences given to their colleagues Messrs Luke Duffy and Gianni Gray who pleaded guilty to their charges, today’s sentences did not provide for the discount that guilty pleas allow sentencing judges to consider. The matter was prosecuted by the Commonwealth Director of Public Prosecutions. Background The charges against Mr Bullen and Mr Ficarra relate to the entry of foreign exchange spot trades on the Foreign Currency Options desk, which had the effect of falsely inflating profits and/or hiding losses between October 2003 and January 2004. As a result of the fictitious trades, on 1 October 2003, the Currency Options Desk falsely reported to the NAB that it had reached its 2002/2003 profit target of $37 million, when the true position was in fact a loss of $5 million. Mr Bullen and Mr Ficarra subsequently received net performance bonuses of $83,044 and $46,350 respectively, such bonus being paid substantially upon the purported achievement of the profit target. By 13 January 2004, when the fictitious trades were discovered by the NAB, the loss incurred was approximately $160 million. Charges against Mr Bullen ASIC alleged that between 1 October 2003 and 9 January 2004, Mr Bullen aided, abetted, counselled or procured Mr Ficarra in the dishonest entering and surrendering of a total of 12 spot trades, aided, abetted, counselled or procured Mr Luke Edward Duffy in the dishonest entering of one foreign exchange options trade and personally dishonestly entered a total of six foreign exchange options trades.
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ASIC alleged that on four occasions each on 1 October 2003, and 2 October 2003, Mr Bullen used his position dishonestly, with the intention of directly or indirectly gaining an advantage for himself, to aid, abet, counsel or procure Mr Ficarra to enter foreign exchange spot trades, that had the effect of falsely inflating profit figures maintained by the NAB to the total value of A$42,131,125.10 on 1 October 2003 and A$42,877,598.85 on 2 October 2003. The false entries made on 1 October 2003 had the effect of converting an approximate loss of A$5 million for the 2002/2003 financial year into a A$37 million profit. Mr Bullen was acquitted on two of these charges. On four occasions on 9 January 2004, ASIC alleged Mr Bullen used his position dishonestly, with the intention of directly or indirectly gaining an advantage for himself, to aid, abet, counsel or procure Mr Ficarra to enter foreign exchange spot trades that on three of the occasions, had the effect of falsely inflating profit figures maintained by the NAB by a total of $45,594,321.54, and one occasion, had the effect of reducing profit figures maintained by the NAB by A$12,245,332.07. On one occasion on 15 December 2003, ASIC alleged Mr Bullen used his position dishonestly, with the intention of directly or indirectly gaining an advantage for himself, to aid, abet, counsel or procure Mr Luke Edward Duffy to enter a foreign exchange options trade that had the effect of falsely inflating profit figures maintained by the NAB by a total of A$93,128,851.97. On one occasion on each of 15 and 17 December 2003, and on four occasions on 18 December 2003, ASIC alleged Mr Bullen used his position dishonestly, with the intention of directly or indirectly gaining an advantage for himself, by entering foreign exchange options trades which had the effect of falsely inflating profit figures by A$50,405,928.60. Mr Bullen was also charged with dishonestly obtaining a financial advantage by deception, being a performance bonus of $83,044 net, by representing that the Currency Options Desk had achieved its budget. Charges against Mr Ficarra Mr Ficarra faced 12 counts of dishonestly using his position, with the intention of directly or indirectly gaining an advantage for himself, when: • on four occasions on 1 October 2003, he entered foreign exchange spot trades which had the effect of inflating profit figures maintained by the NAB by a total of $42,131,125.10 • on four occasions on 2 October 2003, he entered foreign exchange spot trades which had the effect of inflating profit figures maintained by the NAB by a total of $42,877,598.85 • on four occasions on 9 January 2004, he entered foreign exchange spot trades which had the effect on three occasions of inflating profit figures maintained by the NAB by a total of $45,594,321.54, and on one occasion, had the effect of falsely reducing profit figures by $12,245,332.07. Mr Ficarra was also charged with dishonestly obtaining a financial advantage by deception, being a performance bonus of $46,350 net, by representing that the Currency Options Desk had achieved its budget. Charges were first laid against four foreign currency traders in December 2004. On 15 June 2005, Mr Luke Duffy pleaded guilty to offences against s.184 of the Corporations Act 2001 in the County Court and was sentenced to 29 months imprisonment, with a minimum of 16 months. On 23 March 2006, Mr Gianni Gray pleaded guilty to offences against s.184 of the Corporations Act 2001 in the County Court and was sentenced to 16 months imprisonment, with a minimum of eight months. For further information contact: Mark Steward Deputy Executive Director Enforcement Telephone: 03 9280 3467 Mobile: 0412 860 940 Angela Friend ASIC Media Unit Telephone: 03 9280 3338 Mobile: 0412 058 800