Simon Hannes - Insider Trading

Insider Trading

On 4 September 1996, Hannes transferred $200,000 from his Leveraged Equities account at stock broker Ord Minnett to a bank account in his name at the Commonwealth Bank (CBA).

On 5 September 1996, one "Mark Booth" rented a mailbox at Mail Boxes Etc in Mosman, subsequently used for correspondence and grandly called "Suite 140, 656 Military Road".

In the later trial, the court accepted the prosecution's allegation that this Booth was Hannes and everything done as Booth was done by Hannes. For the description below the distinction will be preserved, to show where the identification could (or could not) be made. The name "M. Booth" was apparently from Hannes' sister Mignon Booth (her married name). Hannes said in a police interview about one of the bank cheque applications "M. Booth" that it was to have been "in the name of my sister." But there was no suggestion his sister was involved in any way.

On 6 September 1996, Hannes withdrew cash of $10,000, $10,000 and $20,000 from his CBA account, each withdrawal at a different branch. All were over the AUSTRAC cash transactions reporting threshold. The first two were reported electronically, without Hannes' knowledge. At the third branch it was done manually on a form the teller asked Hannes to sign. It seemed only at that point did he learn of that rule.

That same day "Booth" obtained a bank cheque for $9,000, paid with cash, for stock brokers Ord Minnett and deposited with them. It seemed money that had started at Ord Minnett was going back there, under a different name.

On 9 September 1996, Hannes made further cash withdrawals from his CBA account, this time $9,900, $6000, and four of $9,000, again each from a different branch. This brought the total withdrawn to $91,900.

That same day Booth obtained nine bank cheques, paid with cash, for Ord Minnett and deposited there. Those cheques were obtained all at different bank branches, of the CBA, NAB, ANZ and Westpac. Some of those branches were just metres away from each other. There were eight cheques of $9,000 and one of $9,900. This brought the total deposited to $90,900.

On 17 September 1996, Booth phoned Ord Minnet and spoke to stockbroker Andrew Staehli. Booth identified himself as a marketing consultant from the UK staying at the InterContinental Hotel. (The hotel later gave evidence they'd had no guest of that name.)

Booth got a quote for TNT call options expiring November with a strike price of $2.00. The quote was between 1c and 2c per share, since TNT was then trading for just under $1.60 and there was only 2 months to expiry. Staehli advised this would be a risky trade and required written instructions, plus the usual options client agreement and CHESS sponsorship agreement. Booth arranged to pick up those documents in person from the Ord Minnett office.

On the morning of 18 September 1996 the completed documents were on Staehli's desk. Booth had come to the office, but Staehli never met him in person (and therefore could not subsequently identify him). The options agreement was witnessed by one "Alexi Voltraint" of 52 Railway Rd, Petersham. It later turned out there was no such person, but at number 51 was Patricia Myers whom Hannes had met at a book club meeting that month.

Booth's written instruction was to buy November $2.00 TNT call options for up to 2c each, as many as could be had (including brokerage expense) for the money on account. Staehli did this that day the 18th and then the 19th at prices of 1.5c or 2c per share, totalling about 5,000 options contracts (on 1,000 shares each).

On 19 September 1996 Booth opened a voicemail service at Voicemail National in Surry Hills. He phoned Staehli to give him that number, and Staehli advised the options had been bought and $1,500 remained in the account. It apparently annoyed Booth that not all the money had been applied.

On 2 October 1996 KPN announced its takeover bid, for $2.45 per share. This was generally regarded as rather high at the time, some commentators even suggested the Dutch had miscalculated the exchange rate or something, but the TNT business in Europe was highly desirable for them and the bid had the backing of the TNT board.

Staehli talked to Booth that afternoon, telling him he'd become a millionaire. The options were now worth roughly the difference between the strike $2.00 and the bid $2.45, an amount over $2 million. On 3 October 1996 Staehli received a letter from Booth instructing him to hold the position until 4 November 1996 in case a rival bidder made a higher offer, then sell.