Insider Trading – Fine

This is a case study on a charge of Insider Trading with fine as the resulting sentencing penalty.

Our client was charged with Insider Trading and was arrested following an ASIC investigation sparked by its Market Surveillance Team and investigation by ASIC’s Market Integrity Enforcement team.

What is alleged to have occurred?

The client was part of a team working on a proposed take-over and was privy to proposed takeover bids. Some shares were purchased on his behalf with the benefit of that information.

Insider Trading is a serious offence under the Australian Corporations Act 2001. The elements of this offence include a person trading in financial products while in possession of ‘inside information’, or passing on ‘inside information’ which they either knew or should have reasonably known they were in possession of at the time.

To put it another way, Insider Trading involves buying or selling a company’s shares based on confidential information about that company. It also includes the actions of individuals who share this inside information with others, knowing that those recipients might trade shares or other financial products based on it.

The penalties for Insider Trading are severe, as it can attract a maximum sentence of 15 years imprisonment.

What happened at court?

The matter proceeded as a plea of guilty. A detailed plea in mitigation was presented on the client’s behalf. The court was provided with submissions addressing the factual circumstances of the trades, which raised issues capable of being presented in mitigation. Evidence of the client’s good character was placed before the court, along with submissions addressing the personal impact a custodial sentence would have on him given his circumstances.

What was the result?

For the charge of Insider Trading, a fine of $15,000 was imposed. The client was also sentenced to a 12-month suspended sentence for some remaining charges.

This was a great result given that the Courts have indicated that this sort of offending should normally result in actual gaol time.

The reason for the result was that there were factual issues in the trades that were able to be presented in mitigation. Also, the client was a man of good character whose circumstances were such that a prison term would have been devastating for him.

Please note that each case is unique and requires an individual approach and strategy.