ASIC claims Sonray founders used illegitimate accounts, Bill Express executive jailed for four months

The Australian Securities and Investments Commission is on the prowl, filing a Federal Court affidavit accusing Sonray founders Scott Murray and Russell Johnson of using “fictitious client accounts” to conduct unauthorised trades worth up to $30 million.

Meanwhile, former Macquarie Equities client advisor Newton Chan has been jailed following an ASIC investigation for his involvement in the manipulation of the share price of collapsed bill payment operator Bill Express.

ASIC investor Glenn Childs filed an affidavit with the Federal Court yesterday, Fairfax has reported, alleging Murray and Johnson used “fictitious client accounts” to conduct unauthorised trades worth over $30 million during a four year period.

The watchdog is currently investigating the collapse of the trading firm, which collapsed last month with over 4,000 client accounts frozen. It specialised in contracts-for-difference trading, a particularly risky form of investing which ASIC has even warned against in a recent report.

”Mr Murray and/or Mr Johnson conducted a substantial volume of trading through the fictitious trading accounts,” the affidavit reportedly states, adding that based on preliminary investigations, Murray may have broken regulations in the Corporations Act.

”The fictitious trading accounts were unfunded. The effect of the unauthorised trading has caused a significant deficiency in the cash reconciliation of client monies.”

”Based on information known to me at this time, however, it is possible that the quantum of unauthorised trading may be in the vicinity of between $20 [million] and $30 million, but this amount is subject to further investigations being carried out.”

It comes after Murray provided an undertaking not to leave Australia, with Johnson also agreeing to provide two weeks’ notice before any overseas movement. Childs apparently wants to question Murray as soon as possible, saying he will be necessary to understand the “trading activities of certain client accounts”.

Meanwhile, the Supreme Court has ruled former Macquarie Equities client advisor Newton Chan must serve 20 months in prison for his involvement in the manipulation of Bill Express’s share price – with a ruling that four months should be served immediately.
It was found that between May 3, 2006 and March 26, 2008, Chan used a number of accounts to obtain over 34 million BXP shares, worth over $6.1 million in total, In over 900 transactions. The court ruled these transactions created, or were likely to create, an artificial price for BXP.

Justice Forrest stated that if Chan hadn’t pleaded guilty, he would have received a longer sentence of three years. It was heard that he initially lied to ASIC investigators, but later confessed.

“You were a senior and highly respected client adviser within the Macquarie Group,” Forrest said. “You were not an impressionable youth but a man of 42 when this offending commenced. I simply do not accept that mere charisma and glowing corporate prospects transformed you into a rogue trader.”

“I consider that it is only by the imposition of such a sentence that others considering manipulating the market in some way will pause to think about the potential consequences of their actions.”