The Australian Securities and Investments Commission (ASIC) made a conscious effort toward imposing draconian penalties on practitioners of insider trading last year, a move that the regulatory authority stated clearly in last year’s report on its enforcement activity.
Australia is well renowned for its stable economy and good business ethic, which is why so many of its domestic FX firms have prospered, and partly, along with the proximity and ease of doing business with the Asia Pacific nations, why other large FX firms have established offices in the Antipodes.
Aside from a prominent FX industry, Australia’s financial markets economy also encompasses a healthy stock and equities market, as well as a valuable local commodities trading environment due to the raw materials extracted locally by large multinational mining companies.
An example of Australia’s commitment to ensuring that those wishing to transgress are brought to book occurred on Friday last week, when Mr Peter Charles Pritchard Farris, of Karrinyup, Western Australia, appeared in the Perth Magistrates Court today on two counts of insider trading.
The charges relate to the sale of 750,000 Northern Star shares on a trading account associated with Mr Farris, between November 28 and 29, 2012, while still a director of Northern Star.
ASIC alleges that Mr. Farris traded while in possession of information relating to a proposed sell down transaction. It is alleged that as a result of the trades, Mr Farris avoided a loss of approximately $123,975, as a result of which he faces a Mr Peter Charles Pritchard Farris, of Karrinyup, Western Australia, appeared in the Perth Magistrates Court today on two counts of insider trading.
The charges relate to the sale of 750,000 Northern Star shares on a trading account associated with Mr Farris, between 28 and 29 November 2012, while still a director of Northern Star.
ASIC alleges that Mr Farris traded while in possession of information relating to a proposed sell down transaction. It is alleged that as a result of the trades, Mr Farris avoided a loss of approximately $123,975. The matter has been adjourned to 12 September 2014, however if found guilty, Mr. Farris could be issued with a maximum penalty of 10 years’ imprisonment or a fine of $495,000, or both.
That is a substantial penalty, and the prospect of a decade at Her Majesty’s pleasure is surely deterrant enough from the temptation to engage in this practice, especially when considering that the potential loss which may have been suffered by Mr. Farris under normal market conditions without prior knowledge which allegedly influenced his decision was not particularly large.
Interestingly, criminal prosecutions in Australia with regard to market abuse are quite clearly a priority over bringing to book operators of failed electronic trading companies, as the tariff that Mr. Farris faces contains a potentially longer jail sentence than those applied to the directors of the ill-fated Sonray Capital Markets which went to the wall with a $46 million liability.