A Maltese financial services company at the centre of a US investigation into a $100 million insider trading scandal is insisting it has no knowledge of the alleged scam.
On Monday, the US Security and Exchange Commission filed legal proceedings against 15 companies, including St Julian’s-based trading firm Exante Ltd.
The SEC, a federal agency tasked with maintaining fair markets, is claiming the companies utilised leaked company earnings reports from a hacking scheme between 2010 and 2015.
In all, American investigators believe Exante could have made in excess of $24 million through the scam over the past five years.
When contacted, the company’s head of trading, George Grech, declined to comment. However, in a statement, the company said Exante was not a defendant in the criminal proceedings and none of its directors, owners or employees had been charged.
Exante never traded US stocks for its own account
However, it said it had engaged Howard Schiffman, a former SEC prosecutor, and a US-based law firm that routinely represented major financial services organisations to defend its interests.
“Exante never traded US stocks for its own account and intends to defend its reputation rigorously,” the company said.
It added that it would be fully cooperative with all relevant authorities and had already been in touch with local regulators.
The SEC alleges that Exante and the other companies listed in the investigation “frequently made illicit trades” to manipulate the market.
A court application filed by the SEC on Monday prompted a series of press conferences from US heavyweights, including US Secretary of Homeland Security Jeh Johnson who described the scam as “traditional securities fraud with a twist”.
The 61-page court application, seen by this newspaper, claims that between 2010 and as recently as May this year, the companies gained early access to more than 150,000 press releases containing earnings figures and other secret corporate information. The companies then allegedly used the leaked information to trade before the documents were published, exploiting a time gap that gave them an unfair advantage on the stock exchange.
Among the nine people already indicted were Ukrainian hackers who are charged with stealing sensitive information.
Exante insists it has no knowledge of the hackers and says it never gained any unfair advantage on the stock market. The SEC disputes this and in its court application alleges that Exante used other companies owned by its directors to make irregular deals.
American investigators said several of Exante’s directors were also owners of co-defendant Global Hedge Capital Fund Ltd and that the two entities shared employees.
“Exante and Global Hedge frequently made illicit trades in the same securities, on the same days and around the same time, and often through the same IP addresses,” the SEC said.
Exante made no mention of Global Hedge but insisted it was not a hedge fund.