With Citigroup being sued in Australia for insider trading, the corporate regulator has made a veiled attack on the world's biggest investment bank and all the financial giants, claiming they are all prone to conflicts of interest.

Needless to say, it's an unusual move by the regulator in the lead up to a test case where it's trying to prove a company has engaged in insider trading. It also provides ammunition for those claiming the regulator is out on some sort of jihad against investment banks.

Certainly, the comments from Australian Securities and Investments Commission deputy chairman Jeremy Cooper raise questions about the way investment banks operate right around the world. What he is basically saying is that they are all potentially conflicted. For its part, Citigroup is refusing to comment but privately there are mutterings that Cooper is trying to become an Australian Eliot Spitzer.

You'll find the text of Cooper's speech here .

The case is due to come up for a directions hearing in Sydney next month. For a good summing up of the issues involved check this report Was Anyone Listening Through The Chinese Wall?

Back in April, I blogged on why this case has enormous international implications. Put simply, Citi was just doing what a modern investment bank does. And yes, the modern investment bank is inherently conflicted and by definition, the source of the profits would have to be opaque. But then, its clients would know that and they would have a choice. Which is why some of Citi's competitors, including some in the northern hemisphere, might even be chipping in to fight this case.