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. Last Updated: 07/27/2016

Prosecutor Seizes MICEX Records




The prosecutor general has seized Moscow Interbank Currency Exchange trading records in what analysts said is a sign that his office is investigating allegations of insider dealing in the days before the August collapse of the treasury-bill market.


The exchange, or MICEX, was ordered Tuesday to turn over a copy of its database containing all T-bill operations from 1993 through Nov. 1, 1998, Venyamin Simonov, head of the exchange's analytical department, confirmed Friday.


"[The Prosecutor General's Office] has opened an investigation against someone, we don't know who," Simonov said.


"They came with all of the proper documentation, so we were required by law to hand over the information," he said.


Simonov said the prosecutor general had not accused the exchange of any wrongdoing.


Debt market analysts said the move seemed to confirm rumors that the government was looking into possible insider dealing on the exchange.


"They are probably trying to see if some bank dumped a lot of its [T-bills] just before the crisis," said an analyst at a Western brokerage who asked not to be identified. "That, of course, would be an obvious sign that it knew something ahead of time."


He added that another possibility was that the prosecutor's office is investigating widespread rumors from earlier this year about foreign banks using the market to rake in huge profits.


"There was a lot of speculation in the press in the spring that a few foreign banks were creating panic on the market by selling huge stakes and then buying them back for cheap," the analyst said.


In any case, the prosecutor general will have difficulty getting a conviction for insider trading in a Russian court because the nation hasn't passed the necessary laws for such cases, he said.


The general prosecutor's ease in obtaining what would be considered confidential information in other nations serves to highlight the broad powers that the office has in Russia's legal system.


According to Alexander Podolsky, a senior attorney at Price Waterhouse who formerly worked for the Moscow prosecutor's office, once a case has been formally opened, the investigator has the right to go into any business and request any documents he wants.


The only situation in which an investigator is required to get a warrant - which is signed essentially by his superior and not by a judge - is for a general search, Podolsky said.


"If he knows what he wants, though, he can just go in and get it," he said.