Insider trading - with pathetic sentencing it will never stop

[sydboy007]

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

The former chairman of Gunns Ltd John Gay has received a $50,000 fine for insider trading but will not serve time in jail. Will such a sentence really deter others who might be tempted to engage in insider trading?

Earlier this month, Mr Gay entered a guilty plea to charges of insider trading resulting from the sale of 3.4 million Gunns' shares for about $3 million in late 2009. At the time he sold the shares Mr Gay was aware of a private management report which indicated an expected drop in Gunns’ profits. When the report was later released, Gunns’ share price dropped significantly. This means that Mr Gay avoided a significant loss by selling the shares when he did.

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

 

[Trembling Hand]

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.

 

[sydboy007]

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

 

[Wysiwyg]

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)

 

[basilio]

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 ?

 

[skyQuake]

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.

 

[Julia]

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.

+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.

 

[sydboy007]

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.

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.

 

[craft]

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

 

[SirRumpole]

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

 

[banco]

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

I could never undertand what his defence actually was.

 

[SirRumpole]

Re: The Consumer Thread

I could never undertand what his defence actually was.

Greed ?

 

[McLovin]

Re: The Consumer Thread

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.

 

[CanOz]

Re: The Consumer Thread

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?

 

[banco]

Re: The Consumer Thread

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.

 

[skc]

Re: The Consumer Thread

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...

 

[banco]

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.

 

[skc]

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.

 

[Gringotts Bank]

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

 

[banco]

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.