# Insider trading - with pathetic sentencing it will never stop



## sydboy007 (27 August 2013)

Seriously, a guy sells $3M in shares that end up being worthless not too long after, and all he gets is a $50K fine.



> *Former Gunns chair guilty of $3m insider trading but only gets a $50k fine*
> 
> By Juliette Overland
> 
> ...




More: http://www.thebull.com.au/articles/...nsider-trading-but-only-gets-a-$50k-fine.html


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## Trembling Hand (27 August 2013)

sydboy007 when you post stuff from the web can you please also post the link to them? I often see stuff from you including eco graphs without links, makes it hard to follow up.


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## sydboy007 (27 August 2013)

http://www.thebull.com.au/articles/a/40234-former-gunns-chair-guilty-of-$3m-insider-trading-but-only-gets-a-$50k-fine.html


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## Wysiwyg (12 September 2013)

It is happening every day in some way. "Steal a little and they throw you in jail. Steal a lot and they make you king."

(Bob Dylan)


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## basilio (12 September 2013)

It's very interesting.

I thought Courts and judges were able to impose  fines or paybacks if criminals made large sums of money from their crime.

Doesn't seem to be any evidence of that in this case. Why no appeal ?


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## skyQuake (12 September 2013)

basilio said:


> It's very interesting.
> 
> I thought Courts and judges were able to impose  fines or paybacks if criminals made large sums of money from their crime.
> 
> Doesn't seem to be any evidence of that in this case. Why no appeal ?




Couple of mitigating factors to the case.

1. Inside trading fine at that time was $250kish max
2. Court found that he had a legit reason to sell stock, which would have arguably been done regardless of whether he had inside info or not.
3. Plus plea bargaining with the prosecutor + health issues

In this case he didn't 'make' any money per se, but reduced losses which is a bit different.


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## Julia (12 September 2013)

skyQuake said:


> Couple of mitigating factors to the case.
> 
> 1. Inside trading fine at that time was $250kish max
> 2. Court found that he had a legit reason to sell stock, which would have arguably been done regardless of whether he had inside info or not.
> ...



+1.   His medical prognosis was poor and he was legitimately found to have sold on advice to get his affairs in order prior to dying.


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## sydboy007 (12 September 2013)

skyQuake said:


> Couple of mitigating factors to the case.
> 
> 1. Inside trading fine at that time was $250kish max
> 2. Court found that he had a legit reason to sell stock, which would have arguably been done regardless of whether he had inside info or not.
> ...




He got $3M for his shares.  If he was trying to sell today he'd pretty much get nothing.

I'd like to know how much time passed between when he found out about his cancer, when he found out Gunns was going broke, and when he decided to sell and what evidence he had that he was in the process of selling before he found all the bad news that was soon to be released.


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## craft (12 September 2013)

What a complete joke – This sort of rubbish in Tasmania goes all the way back to the crossing the floor bribery scandal. Where the major players were Edmund Rouse, Robin Gray, John Gay and David McQuestin – all Gunns directors at some stage.

An investigative journalist could have a field day with the assets Gay has brought either directly off Gunns or acquired via Neville Smith group who in turn acquired them off Gunns.  Dig around in Specialty Veneers at Somerset for example. And all this occurred at fire sale prices and since the insider transaction that was supposedly to cover the debts of a dying man.

Slap on the wrist and the Judges verdict describes him as a person of exemplary character, a generous and caring person of honesty and integrity  with mitigating circumstances. Spare me.

His opponents get more than that for spraying graffiti on his fence or sitting in a tree.

If they wanted a decent insider trading conviction they shouldn’t have chosen Tasmania – the corruption isle.

I’m sure there’s material here for a continuation of this article by Richard Flanagan in The Monthly May 2007. 
http://www.themonthly.com.au/issue/2007/may/1348543148/richard-flanagan/out-control


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## SirRumpole (2 June 2016)

*Re: The Consumer Thread*

Sydney stockbroker Oliver Curtis found guilty of conspiring to commit insider trading


http://www.abc.net.au/news/2016-06-02/oliver-curtis-found-guilty-of-insider-trading-charges/7461780


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## banco (2 June 2016)

*Re: The Consumer Thread*



SirRumpole said:


> Sydney stockbroker Oliver Curtis found guilty of conspiring to commit insider trading
> 
> 
> http://www.abc.net.au/news/2016-06-02/oliver-curtis-found-guilty-of-insider-trading-charges/7461780




I could never undertand what his defence actually was.


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## SirRumpole (2 June 2016)

*Re: The Consumer Thread*



banco said:


> I could never undertand what his defence actually was.




Greed ?


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## McLovin (2 June 2016)

*Re: The Consumer Thread*



banco said:


> I could never undertand what his defence actually was.




It was along the lines of he was told what Orion was buying, but that wasn't moving the price. What was moving the price was that Hartman was doing large block trades. Because Curtis didn't know this, he claimed, unsuccessfully, that he wasn't privy to _market sensitive_ inside information.


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## CanOz (2 June 2016)

*Re: The Consumer Thread*



McLovin said:


> It was along the lines of he was told what Orion was buying, but that wasn't moving the price. What was moving the price was that Hartman was doing large block trades. Because Curtis didn't know this, he claimed, unsuccessfully, that he wasn't privy to _market sensitive_ inside information.




Is it possible to get finer details of this?


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## banco (2 June 2016)

*Re: The Consumer Thread*



McLovin said:


> It was along the lines of he was told what Orion was buying, but that wasn't moving the price. What was moving the price was that Hartman was doing large block trades. Because Curtis didn't know this, he claimed, unsuccessfully, that he wasn't privy to _market sensitive_ inside information.




Well I guess when you a barrister you work with what you've got.  I can't imagine that would have played well with the jury. Walking in looking like you stepped out of American psycho with your blonde attention seeking wife probably didn't help either. 

I was astonished Orion was paying $300,000 annually to Hartman in 2007 for what seemed like a low to mid level job.


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## skc (2 June 2016)

*Re: The Consumer Thread*



banco said:


> I could never undertand what his defence actually was.




Actually I don't really understand why it is insider trading?

From what I've read



> The Crown's case was when Mr Hartman was an equities dealer at Orion Asset Management he would give information about Orion's trading intentions and Curtis would then trade contracts for difference on those shares before Orion's deal went through to take advantage of the share price movement.
> 
> Read more: http://www.afr.com/news/oliver-curtis-found-guilty-of-insider-trading-20160527-gp5yqf#ixzz4AQ3ggReY
> Follow us: @FinancialReview on Twitter | financialreview on Facebook




I don't know why Orion's trading intentions are inside information - Orion is not inside the company, it's just a market participant. Consider this definition of inside information http://www.mondaq.com/australia/x/291416/Corporate+Crime/The+ins+and+outs+of+insider+trading+Part+1



> *WHAT IS "INSIDE INFORMATION"?*
> 
> Broadly, "inside information" refers to "information" that is not "generally available", and if it were "generally available", a reasonable person would expect it to have a material effect on the price or value of particular listed securities or other financial products. It does not matter if the information is false.




Suppose Orion Asset Management announces they want to buy XYZ... would a reasonable person expect this information to move the market? I'd say the answer is actually No. It _might _move the market... but there is no certainty of that. It depends on the stock and how the trader plan to execute the trade.

Take another example... there are numerous newsletters out there offering stock tips to subscribers. Do you consider them "generally available" even if they are only available to their own subscribers? If the newsletter says it's buying XYZ, and it's subscribers buy as well... is it an insider trading offense? What if the newsletter only has 1 subscriber? Isn't that the case here where Hartman is running the newsletter (illegally perhaps) whilst Curtis is the only subscriber?

Hartman may have violated his terms of employment or committed commercial fraud against his employer, but that is NOT insider trading. Curtis is just front running the order... it may or may not be illegal. But I fail to see how this is insider trading. The only reason that Curtis made money was because Hartman went super aggressive with his execution... knowing that Curtis is front running him. No actual inside information was involved.

P.S. Me no law guy...


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## banco (2 June 2016)

They got that kid from NAB and ABS for trading on ABS stats in the forex market so I assume Australia's insider trading laws must be broadly drafted (I don't remember studying them much in uni). Incidentally I understand the NAB guy lost on at least a few trades because even though he had the info ahead of time he guessed wrong about which way it would move the market.


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## skc (2 June 2016)

banco said:


> They got that kid from NAB and ABS for trading on ABS stats in the forex market so I assume Australia's insider trading laws must be broadly drafted (I don't remember studying them much in uni). Incidentally I understand the NAB guy lost on at least a few trades because even though he had the info ahead of time he guessed wrong about which way it would move the market.




Yes but there's got to be a big difference in materiality (is that a word?) between
1. Unpublished official statistics compiled by a major government department.
2. Undisclosed trading intention of a minnow asset manager.


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## Gringotts Bank (2 June 2016)

I'm still trying to work out what 'pinning' is.


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## banco (2 June 2016)

skc said:


> Yes but there's got to be a big difference in materiality (is that a word?) between
> 1. Unpublished official statistics compiled by a major government department.
> 2. Undisclosed trading intention of a minnow asset manager.




Given they made large sums off it doesn't that go to "materiality"? It's a bit hard to say that the information wasn't useful when you bank $1 million plus using it. I'd argue the stuff Curtis etc. had was more useful. You know what effect a large buy order is going to have. You can only guesstimate what a certain stat on unemployment will do to the markets.


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## McLovin (2 June 2016)

*Re: The Consumer Thread*



skc said:


> I don't know why Orion's trading intentions are inside information - Orion is not inside the company, it's just a market participant.




I think you're defining insider too narrowly. The Corps Act defines inside information as...



> "inside information " means information in relation to which the following paragraphs are satisfied:
> 
> (a)  the information is not generally available;
> 
> (b)  if the information were generally available, a reasonable person would expect it to have a material effect on the price or value of particular Division 3 financial products.




And an "insider" is anyone who possesses that information...



> Prohibited conduct by person in possession of inside information
> (1)  Subject to this Subdivision, if:
> 
> (a)  a person (the insider ) possesses inside information; and
> ...








skc said:


> Suppose Orion Asset Management announces they want to buy XYZ... would a reasonable person expect this information to move the market? I'd say the answer is actually No. It _might _move the market... but there is no certainty of that. It depends on the stock and how the trader plan to execute the trade.




It's possible if you casually came across that information you could make that defence, but when you're making hundreds of thousands by front running a FM's trades it's much harder to argue that you didn't think that information would move the market. In the end, he was on trial for conspiracy to commit the act, and that relied on Hartman's testimony that they had planned it. I wonder why they didn't go for actual insider trading charge, maybe too hard to make it stick. 

I think my initial explanation of the defence was not complete. Curtis was basically saying there was no plan (conspiracy) and the prosecution was saying there was. Part of that defence was that knowing Orion was buying wouldn't move the market, so it didn't meet the definition of insider information. Thus no conspiracy.



skc said:


> Take another example... there are numerous newsletters out there offering stock tips to subscribers. Do you consider them "generally available" even if they are only available to their own subscribers? If the newsletter says it's buying XYZ, and it's subscribers buy as well... is it an insider trading offense? What if the newsletter only has 1 subscriber? Isn't that the case here where Hartman is running the newsletter (illegally perhaps) whilst Curtis is the only subscriber?




Would a reasonable person expect a 1 person newsletter to be moving the market?

The definition is broad, and pretty opaque really, which is why they have the reasonable person test. I think the fact something is disseminated in a newsletter probably makes it hard to call it inside information. 

Here is generally available...plenty of interpretation left in it, but probably covers newsletters based on the bit I highlighted.


> When information is generally available
> (1)  For the purposes of this Division, information is generally available if:
> 
> (a)  it consists of readily observable matter; or
> ...


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## skc (2 June 2016)

*Re: The Consumer Thread*



McLovin said:


> It's possible if you casually came across that information you could make that defence, but when you're making hundreds of thousands by front running a FM's trades it's much harder to argue that you didn't think that information would move the market.




The point is... Curtis only made money because Hartman traded aggressively. 

So is the inside information "Hartman has a $Xm sell order to fill on XYZ and he will trade aggressively"? 

That just sounds like one individual's intention. 

What if one trader speak with another trading mate that they should both trade XYZ aggressively? Have they committed insider trading?

Anyway... what they did clearly isn't right so I've got nothing against them being punished one way or another. 

Now another question.... there has been quite a few examples of research houses publishing fraud reports on various companies (think Sino Forrest or Quindell), but they release the report AFTER they have established their short positions.

- The reports before publication isn't _generally available_.
- A _reasonable _person can expect the reports to produce material impact on these companies if made public. 

So has insider trading been committed?


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## McLovin (2 June 2016)

*Re: The Consumer Thread*



skc said:


> The point is... Curtis only made money because Hartman traded aggressively.
> 
> So is the inside information "Hartman has a $Xm sell order to fill on XYZ and he will trade aggressively"?
> 
> That just sounds like one individual's intention.




Yes. If a reasonable person thinks that would move the price then it is inside information. It's not really any different to someone saying "Rupert Murdoch told me he's going to start buying TEN shares tomorrow".



> What if one trader speak with another trading mate that they should both trade XYZ aggressively? Have they committed insider trading?




I don't know about that one, sorry.





skc said:


> Now another question.... there has been quite a few examples of research houses publishing fraud reports on various companies (think Sino Forrest or Quindell), but they release the report AFTER they have established their short positions.
> 
> - The reports before publication isn't _generally available_.
> - A _reasonable _person can expect the reports to produce material impact on these companies if made public.
> ...




No. I don't think it would pass the first leg of not being generally available information.


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## SirRumpole (23 September 2019)

As if we didn't know,

*Insider trading 'rife' among ASX-listed company directors: study*

A stockbroker says it's all fine and we should "respect" this practise.

I say BS to that. 

https://www.abc.net.au/radio/progra...-asx-listed-company-directors:-study/11537310


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## Garpal Gumnut (22 August 2022)

Any ASF member who is a chartist and who follows company announcements would be aware of the extensive illegal insider trading and manipulation of Australian Markets which is massively under investigated and punished. 

A pertinent article on insider trading in the US on the NYSE and penalties approaching $US200m in the SMH shows how far behind ASIC, AUSTRAC and the other organisations involved in monitoring our market and money flow are.

https://www.smh.com.au/business/mar...t-has-a-whatsapp-problem-20220821-p5bbkg.html

It would appear that with WhatsApp, Signal and Telegram the executives and traders of Australian companies, funds and banks are working in a risk free atmosphere when doing deals and sharing information contrary to good governance without informing the market and are in fact acting illegaly. These deals cause untold losses to ordinary investors and traders. 

gg


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