FOR all its policies of ''Chinese Walls'', the modern reality of open-plan offices led the merchant bank JP Morgan to be caught up in an insider trading investigation of one of its staff, court documents reveal.
Today its former relationship services associate Elisa Maree Rietbergen and her boyfriend, Joseph Levi, who was a partner at National Australia Bank, are to appear in the NSW District Court on insider trading charges. They pleaded guilty in Downing Centre Local Court last month.
An agreed statement tendered to the court said that last March the US private equity behemoth Blackstone engaged JP Morgan to advise on and potentially underwrite its proposed acquisition of Valad Property Group, listed on the stock exchange.
The team that JP Morgan assembled in Sydney, mainly from the credit risk area, was on the same floor as the commercial banking unit where Rietbergen worked. She and Levi shared an interest in stocks and trading, regularly emailing each other about the market. Levi had a particular interest in Valad. He had bought Valad stapled securities in 2009 and 2010 and was sitting on an unrealised capital loss of $20,800.
''Members of the commercial bank and credit teams sat in the same vicinity in open-plan seating,'' the document said, and Rietbergen could overhear their conversations. James Bruce, the head of the credit-risk team, had an office but ''even when the door was closed a person outside, but nearby the office, could ordinarily hear conversations taking place''.
''By 18 April Ms Rietbergen, from overhearing conversations at work involving members of the credit team and seeing them interact with investment bankers who were on the deal team, knew that JP Morgan was acting in relation to a proposed transaction involving Valad,'' it said.
On April 21, it is alleged, Rietbergen used her work laptop to access a network drive accessible to the commercial bank and the credit team and downloaded a PDF with emails headlined ''Blackstone (Valad acquisition) underwriting approval call''. The market then closed for Easter.
Rietbergen and Levi met on Easter Saturday then both went to their respective offices, where Levi placed an order to buy 30,000 Valad securities. Although the Tuesday was a public holiday, some JP Morgan staff were on deck. Three of the deal team met in Mr Bruce's office, with the door open, and while they discussed progress, Rietbergen lingered at a nearby printer.
After speaking with her on the phone, the next day Levi increased his order to 40,000 Valad securities. He also phoned his father, Eli Levi, who placed an order for 20,000. The statement said Eli Levi was unaware his son and Rietbergen had inside information.
On April 27 Joseph Levi sent an email to Rietbergen saying ''I got em!!!'' followed by, ''Then we have to decide what restaurant to celebrate at?:)''.
The next day Valad went into a trading halt before announcing the takeover plan. When trading resumed the opening price of $1.76 was a 52 per cent jump on the previous closing price.
After the takeover was complete, Levi received $108,000 for his 60,000 Valad securities, of which $72,000 was for securities he acquired in April. His net profit after tax was assessed at $13,445.
Rietbergen and Levi will be sentenced later.