Labor is demanding an investigation into whether the final report of the banking royal commission was leaked from inside the government, delivering a $22 million windfall to investors.

The half a billion dollar plunge on the banks just hours before the public release of the report has raised eyebrows that news the report was softer than expected on the banks was leaked.

Treasurer Josh Frydenberg “guaranteed” the royal commission’s final report would not leak while the government declined to release the document for three days.

Labor’s shadow financial services spokesman Clare O’Neil has now formally asked the question, citing a report in The New Daily by journalist Michael Pascoe.

Clare O’Neil has asked the claim to be investigated. Photo: Twitter

In a letter titled: Possible leak of the Final Report of the Royal Commission into the Banking, Superannuation and Financial Services Industry, Ms O’Neil has asked the secretary of the Department of Prime Minister and Cabinet Dr Martin Parkinson to investigate the matter.

“The Australian people were guaranteed that once the Morrison government had received the Hayne report on Friday, it had implemented all necessary arrangements to ensure it would not leak prior to its official publication shortly after 4pm on Monday, 4 February, 2019,” she said.

“This was to ensure its price-sensitive contents would not become public until after the market had closed.

“At approximately 11am on Monday traders plunged a half a billion dollars into bank shares; an investment which turned a $22 million profit within just 24 hours, thanks to the unexpected increase in the value of bank shares when the market re-opened on Tuesday morning.

“A professional fund manager quoted in a report today by respected economic commentator Michael Pascoe concludes that this is a clear case of insider trading, saying, “any alternate explanation is fanciful”.

Ms O’Neil’s letter notes that under section 1043A of the Corporations Act 2001, insider trading is a criminal offence punishable by up to 10 years in prison.

The ABC’s Leigh Sales raised the prospect of insider trading on the 7.30 program on Monday evening and asked whether third parties were provided advance notice of the contents of the Hayne report.

“Absolutely not. There was a lock-up and there were security guards around Parliament House. There was obviously Treasury officials and it was very, very closely monitored,” Mr Frydenberg said.

But Ms O’Neil said it was clear that the suspicious trading occurred before the media lock-up.

“Given that the lock-up commenced at 1pm – two hours after this activity on the ASX – and the Hayne report was in strictly limited circulation for a number of days within the government prior to its official publication, I ask that you investigate whether information in the report was leaked by a ministerial office, a minister or a member of the Australian Public Service prior to its publication,” the letter states.

“I have copied this correspondence to the chair of the Australian Securities and Investments Commission, James Shipton, and the chief executive officer of the Australian Securities Exchange, Dominic Stevens.”

The New Daily‘s Michael Pascoe wrote this week that the speculation was running wild among fund managers that someone had inside information on the secret report.

“Someone, somewhere, somehow received a nod and wink on Monday morning that the banks would actually come out of the royal commission better than expected,” he wrote.

“With the banks down a quarter per cent, some trader looked out the window at 11am and noticed it was all sunny and cheerful and decided to buy a half billion dollars worth of the major banks ahead of the report into their own malfeasance. I don’t think so.”