BlackBerry records provided prosecutors with their evidence
Enoch Yiu 11 September 2009
The BlackBerry may have become the executive’s best friend, but for those who do not play by the rules, it can also be their undoing.
Intricate expert evidence on insider dealer Du Jun’s use of his BlackBerry was a key part of the prosecution’s case against him.
It was used to prove that, contrary to his claims, Du had read e-mails containing confidential information that was then used by him for insider trading.
The former Morgan Stanley Asia banker was convicted yesterday of insider dealing involving HK$87 million worth of Citic Resources Holdings shares in 2007.
Du could only be convicted if prosecutor Charlotte Draycott was able to prove beyond reasonable doubt that he had access to inside information about deals involving Citic Resources.
The banker maintained he had never read the crucial e-mails, as he was travelling at the time or just did not see them. But his BlackBerry betrayed him.
Draycott said the BlackBerry logs showed that the e-mails containing confidential information “were opened and scrolled down manually as the recipient read them”.
“We got advice from the manufacturer of BlackBerrys, who gave evidence from New York,” she said in her submission.
“When you scroll down on a BlackBerry, you have to press for ‘more’. When you press, there is a keystroke recorded. He had pressed ‘more’. If someone does that, they can only be reading the e-mail. He is not doing it accidentally or by mistake. The only inference can be that he is reading the e-mail.”
The BlackBerry record also showed that after reading e-mails about a Citic Resources acquisition plan on February 15, 2007, he did not reply directly but instead e-mailed his broker at Morgan Stanley Asia and instructed him to buy Citic Resources shares - the first of his nine purchases of the shares of the oil company.
E-mail records were also used as key evidence in another insider dealing case. Two months ago, former CLSA Equity Capital Markets director Allan Lam Kar-fai was sentenced in the District Court to six months’ imprisonment for passing on company gossip from colleagues about a deal to a friend, Ryan Fong Yen-kwung, in 2005.
The Securities and Futures Commission’s investigation found that although Lam was not working on the deal, he had passed details about the pricing of the transactions to Fong by e-mail, using “French car” as a code.
Many brokerage firms and investment banks have told their staff that the company has the right to check their e-mails.
Grant Jamieson, a forensic partner at KPMG, said electronic records such as e-mails or computer files were important means of detecting fraud.
“Some people think they have deleted a file or e-mail in their computers and [personal digital assistants] forever when they press the delete button, but in fact this is not always the case,” he said, noting that evidence showing fraud and misconduct could often be found in e-mail conversations.
He said the same applied to conversations on Facebook and MSN.
Giles Nelson, a senior director of Progress Software Corp, which provides a surveillance system for British regulator Financial Services Authority to help it trace malpractice, said regulators around the world, as well as many investment banks and brokerage houses, had installed real-time surveillance to detect misconduct by their staff.
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BlackBerry records provided prosecutors with their evidence
Enoch Yiu
11 September 2009
The BlackBerry may have become the executive’s best friend, but for those who do not play by the rules, it can also be their undoing.
Intricate expert evidence on insider dealer Du Jun’s use of his BlackBerry was a key part of the prosecution’s case against him.
It was used to prove that, contrary to his claims, Du had read e-mails containing confidential information that was then used by him for insider trading.
The former Morgan Stanley Asia banker was convicted yesterday of insider dealing involving HK$87 million worth of Citic Resources Holdings shares in 2007.
Du could only be convicted if prosecutor Charlotte Draycott was able to prove beyond reasonable doubt that he had access to inside information about deals involving Citic Resources.
The banker maintained he had never read the crucial e-mails, as he was travelling at the time or just did not see them. But his BlackBerry betrayed him.
Draycott said the BlackBerry logs showed that the e-mails containing confidential information “were opened and scrolled down manually as the recipient read them”.
“We got advice from the manufacturer of BlackBerrys, who gave evidence from New York,” she said in her submission.
“When you scroll down on a BlackBerry, you have to press for ‘more’. When you press, there is a keystroke recorded. He had pressed ‘more’. If someone does that, they can only be reading the e-mail. He is not doing it accidentally or by mistake. The only inference can be that he is reading the e-mail.”
The BlackBerry record also showed that after reading e-mails about a Citic Resources acquisition plan on February 15, 2007, he did not reply directly but instead e-mailed his broker at Morgan Stanley Asia and instructed him to buy Citic Resources shares - the first of his nine purchases of the shares of the oil company.
E-mail records were also used as key evidence in another insider dealing case. Two months ago, former CLSA Equity Capital Markets director Allan Lam Kar-fai was sentenced in the District Court to six months’ imprisonment for passing on company gossip from colleagues about a deal to a friend, Ryan Fong Yen-kwung, in 2005.
The Securities and Futures Commission’s investigation found that although Lam was not working on the deal, he had passed details about the pricing of the transactions to Fong by e-mail, using “French car” as a code.
Many brokerage firms and investment banks have told their staff that the company has the right to check their e-mails.
Grant Jamieson, a forensic partner at KPMG, said electronic records such as e-mails or computer files were important means of detecting fraud.
“Some people think they have deleted a file or e-mail in their computers and [personal digital assistants] forever when they press the delete button, but in fact this is not always the case,” he said, noting that evidence showing fraud and misconduct could often be found in e-mail conversations.
He said the same applied to conversations on Facebook and MSN.
Giles Nelson, a senior director of Progress Software Corp, which provides a surveillance system for British regulator Financial Services Authority to help it trace malpractice, said regulators around the world, as well as many investment banks and brokerage houses, had installed real-time surveillance to detect misconduct by their staff.
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