SFO charges 2nd individual in options trading investigation
SFO charges second individual in options trading investigation
The Serious Fraud Office (SFO) has laid charges against Mark James Whelan, a 40 year-old unemployed man, in relation to an investigation of the options trading company Derivatek New Zealand Limited (Derivatek).
Last week the SFO laid charges against Gregory Alan Arnott, an options trader who traded through his company, Derivatek, on behalf of New Zealand clients on the Australian Stock Exchange (ASX). Mark James Whelan is an associate of Mr Arnott and the SFO alleges that he assisted to enlist investors to invest funds with Mr Arnott and Derivatek, through his company Global Futures Trading Limited (Global Futures).
Mr Whelan is facing charges laid under the Crimes Act of theft by person in a special relationship (3x) and false statement by promoter (7x).
As with Mr Arnott, the SFO alleges that Mr Whelan used investors' funds to fund a portion of an advance fee for a US$20 million loan and for personal use. The SFO also alleges that in order to conceal this activity, Mr Whelan then issued false statements to these investors.
Mr Whelan has been remanded to appear in the Auckland District Court on 22 November.
Mr Whelan is also currently facing charges laid in September 2011 by the SFO relating to fraud involving Motor Trade Finances Limited.
For further information
Serious Fraud Office
027 705 4550
Note to editors
Background to investigation
The SFO commenced an investigation into Derivatek as a result of information obtained during an earlier investigation into the activities of Australian Securities (NZ) Ltd (ASL), another options trading company operated by Gregory Arnott. Mr Arnott set up and operated the following companies through which he traded: ASL; Derivatek; and Derivatives Management Limited. He is the sole director and shareholder of these companies.
Mark Whelan incorporated Global Futures in November 2006. This company was used by Mr Whelan and various business associates to personally invest with Mr Arnott. From mid-2007, Mr Whelan used Global Futures to obtain high net worth individuals to invest funds which were then to be traded by Mr Arnott through Derivatek.
Individual Global Futures investors received monthly statements from Mr Whelan reporting the value and profit or loss on their individual investment.
Crimes Act offences
Section 220 Theft by person in special relationship
(1) This section applies to any person who has received or is in possession of, or has control over, any property on terms or in circumstances that the person knows require the person-
(a) to account to any other person for the property, or for any proceeds arising from the property; or
(b) to deal with the property, or any proceeds arising from the property, in accordance with the requirements of any other person.
(2) Every one to whom subsection (1) applies commits theft who intentionally fails to account to the other person as so required or intentionally deals with the property, or any proceeds of the property, otherwise than in accordance with those requirements.
(3) This section applies whether or not the person was required to deliver over the identical property received or in the person's possession or control.
(4) For the purposes of subsection (1), it is a question of law whether the circumstances required any person to account or to act in accordance with any requirements
242 False statement by promoter, etc
(1) Every one is liable to imprisonment for a term not exceeding 10 years who, in respect of any body, whether incorporated or unincorporated and whether formed or intended to be formed, makes or concurs in making or publishes any false statement, whether in any prospectus, account, or otherwise, with intent-
(a) to induce any person, whether ascertained or not, to subscribe to any security within the meaning of the Securities Act 1978; or
(b) to deceive or cause loss to any person, whether ascertained or not; or
(c) to induce any person, whether ascertained or not, to entrust or advance any property to any other person.
(2) In this section, false statement means any statement in respect of which the person making or publishing the statement-
(a) knows the statement is false in a material particular; or
(b) is reckless as to the whether the statement is false in a material particular
Role of the SFO
The Serious Fraud Office (SFO) was established in 1990 under the Serious Fraud Office Act in response to the collapse of financial markets in New Zealand at that time.
The SFO operates three investigative teams:
- Evaluation & Intelligence;
- Financial Markets & Corporate Fraud; and
- Fraud & Corruption.
The SFO operates under two sets of investigative powers.
Part I of the SFO Act provides that it may act where the Director "has reason to suspect that an investigation into the affairs of any person may disclose serious or complex fraud."
Part II of the SFO Act provides the SFO with more extensive powers where: "...the Director has reasonable grounds to believe that an offence involving serious or complex fraud may have been committed..."
The SFO's Annual Report 2011 sets out its achievements for the past year, while the Statement of Intent 2012-2015 sets out the SFO's three year strategic goals and performance standards. Both are available online at: www.sfo.govt.nz