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On the inside
Posted: 17/12/2009
The recent charging of Mr Andrew Dalzell with insider trading serves as a timely reminder, in this, the season of giving, that greed is not always good.
ASIC alleges that while Mr Dalzell was employed as a senior manager at KPMG, he bought 40,000 shares in Promentum Limited (“Promentum”), at a time when he had inside information about a proposal by Promentum to acquire the McMillan Group.
Section 1042A of the Corporations Act 2001 (Cth) (the “Act”) defines “inside information” as information that is not generally available and, if the information were generally available, a reasonable person would expect it to have a material effect on the price or value of specified financial products (which, in turn, are able to be traded on a financial market).
Section 1043A(1) of the Act prohibits a person who possesses the inside information (which the person knows, or ought to reasonably know satisfies the definition of inside information) from:
* applying for, acquiring or disposing of specified financial products (or entering into an agreement to do so); or
* procuring another person to apply for, acquire or dispose of those financial products (or enter into an agreement to do so).
A contravention of the insider trading provisions is an offence under section 1311 of the Act. In a criminal prosecution, such a contravention renders the defendant (if an individual) liable to a penalty of $220,000, a five (5) year prison sentence, or both. There may also be civil consequences for engaging in insider trading. Either way, Mr Dalzell is unlikely to be having a very Merry Christmas this year.
Mr Dalzell was granted conditional bail to appear before the court on 2 February 2010. |
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