Chinese wall goes up in smoko

Citigroup Insider-Trading Suit Follows Sydney Sidewalk Chat

(Bloomberg) -- Citigroup Inc. is being sued by Australia's securities regulator after a cigarette break between two of the company's employees on a Sydney sidewalk led to a probe into insider trading, a court document shows.

Paul Darwell, head of equity derivatives, on Aug. 19 met with trader Andrew Manchee outside the company's Park Street offices and told him to stop buying Patrick Corp. shares for Citigroup's account, according to a claim filed yesterday by the Australian Securities and Investments Commission.

Manchee, who then sold 192,352 Patrick shares, had bought more than 1 million earlier that day.

The case is the first of insider trading brought against a company in Australia. Citigroup Chief Executive Officer Charles Prince, 56, last year imposed a ``five-point plan'' to improve compliance at the world's biggest bank by market value.

Citigroup paid $4.7 billion in the past two years to settle suits over the collapse of Enron Corp. and WorldCom Inc., and shut its private bank in Japan after failing to make adequate money-laundering checks.