The practice of hiding or smoothing foreign exchange options profits at National Australia Bank dated back to late 2001, and occurred on the instructions of Ron Erdos, the former head of the bank's market division, one of two former currency traders charged with gaining financial advantage by deception told the County Court yesterday.The practice of hiding selected foreign exchange profits allegedly had it origins in the extensive transactions entered into in its own account in connection with the bank's sale of Michigan National Bank, a US-based subsidiary of NAB sold to release capital. NAB sold Michigan in the wake of the bank's multi-billion loss on its investment in HomeSide, a US-based mortgage processing company in 2001.Vince Ficarra, a former junior trader on NAB's currency options desk, and one of two traders currently on trial in connection bonuses paid arising from false trading records unmasked in January 2004, told the court that he was "in on a phone conversation where Ron Erdos was speaking to [former currency options trading head] Luke [Duffy] and he said, 'We don't want to declare this profit, just make sure that you hide it away somewhere'."Asked about the significance of this conversation in forming a view as to Erdos' attitude to the propriety of smoothing, Ficarra said "That confirmed in my mind what Luke had been telling me ever since I learnt about smoothing, that it was a directive from management to minimise the fluctuations in the profit and loss, and to achieve certain goals. They knew we had the ability to do it, as they knew interest rates had the ability to do it."David Bullen, the second, and more experienced trader on trial in the County Court, made similar claims in evidence on Wednesday.Asked by his barrister how he justified false entries, Ficaara said, ""My justification for those entries was that my boss and his boss, and from what I could tell his boss as well knew of exactly what was going on. They were asking us to achieve a preconceived budget and are asking us to do it in a smooth manner."In an answer that turned into a speech, Ficarra, explained that "management weren't asking us to lie to them, they were asking us to deliver a preconceived line of profit to keep the share price up."If you can show - and a company like NAB that makes billions of dollars year and does so every single year and it's exactly as expected, like the latest report came out that NAB made $1.9 billion for the half year. It was expected that they'd make two. I mean, how does the - how does the market expect that? Because that's exactly what they've promised to deliver, and they deliver on their promise. So the NAB share price continues to go - and that happens in a lot of companies. "Essentially the market price of companies in the stock market hardly ever is going to reflect the actual value of that company, otherwise you wouldn't have