Citigroup may have the distinction of being the first investment bank in Australia to be charged with insider trading. The Australian Securities and Investments Commission charged Citigroup Global Markets Australia with engaging in "substantial proprietary trading" in Toll Holdings Limited three days before the company announced a A$4.6 billion takeover bid for Patrick Corp. last August. A Citigroup spokeswoman, denying all charges, said in a MarketWatch interview that ASIC lacks "any basis of a claim and that this is an attempt to regulate the proprietary trading desks, which are a feature of all major investment banks."

Regardless of the outcome the action, observers say the damage has been done. "It doesn't matter even if they get off, it is a perception," a senior institutional trader told MarketWatch. "Rivals will be sharpening their knives as we speak."