Reports in the Australian newspaper said Macquarie Bank was being investigated by the Australian Securities and Investments Commission concerning trading in Innamincka Petroleum.

Innamincka is chaired by Adam Johnson, whose brother is Macquarie Bank's deputy chairman and leading corporate consultant, Mark Johnson.

It is the latest scandal to tarnish the name of the blue-chip Australian merchant bank.

Another Macquarie Bank executive, Simon Hannes, was jailed in December 2002 following his conviction on one charge of insider trading in the securities of TNT Limited and two charges under the Financial Transactions Reports Act.

A Macquarie Bank spokesman confirmed an ASIC investigation was currently underway but would not comment on the direction or target of the enquiries.

The newspaper report said ASIC had demanded information from Macquarie regards trading in Innamincka, which has experienced outstanding success since listing, chalking up two commercial discoveries in four wells.

Macquarie Bank was influential in the float of Innamincka and assisted again in a fund raising exercise last month. Mark Johnson was reported to have held 1.95 million shares at the 20c float, which this morning was trading at 98c.

Macquarie Bank was also behind the recent float of coal bed methane player, CH4, which enjoyed initial market success until it tanked after another branch of the bank published a report valuing CH4 at less than 75c per share, despite its issue at $1.25. The initial valuation has now drawn fierce criticism.

In November 2002, ASIC involved EnergyReview.net in an investigation into trading by Macquarie Bank into Hardman Resources, in which Macquarie was a major shareholder, and which sold Hardman down heavily from 92c prior to a major placement at 72c.