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15-387MR Former Gunns Ltd chairman ordered to pay $500,000 pecuniary penalty for insider trading
Mr John Gay, former director and chairman of Gunns Limited, has been ordered to pay a $500,000 pecuniary penalty under the Proceeds of Crime Act 2002 (POCA) relating to his conviction for insider trading.
Mr Gay was convicted of insider trading on 23 August 2013 on criminal charges brought by the Australian Securities and Investments Commission (ASIC) and prosecuted by the Commonwealth Director of Public Prosecutions (CDPP).
The CDPP, with assistance from ASIC, subsequently commenced civil proceedings against Mr Gay under POCA seeking a pecuniary penalty order in the amount of the ‘benefit’ derived by Mr Gay from the insider trading.
On 1 December 2015, Justice Estcourt of the Supreme Court of Tasmania concluded that Mr Gay had derived a ‘benefit’ from his offending by avoiding a loss and ordered the CDPP and Mr Gay to engage in mediation.
On 7 December 2015, mediation between the CDPP and Mr Gay took place before the Honourable Ewan Crawford, formerly Chief Justice of the Tasmanian Supreme Court, and this resulted in Mr Gay agreeing to pay a $500,000 pecuniary penalty order within 120 days. On 11 December 2015, an order to this effect was made by Justice Estcourt.
ASIC Commissioner Cathie Armour said that an important aspect of its approach to market integrity was deterring misconduct by individuals who may otherwise assess the risks as worth taking.
'ASIC is committed to ensuring that the proceeds of the crime of insider trading, including any profits derived or losses avoided, are pursued. ASIC acknowledges the CDPP for commencing this action and for achieving an outcome that should send a strong message about the significant consequences of criminal actions', Ms Armour said.
CDPP Deputy Director, Shane Kirne said the proceeds settlement reflects the seriousness of the offending.
'The interests of justice have been met because Mr Gay has been made to disgorge his benefit resulting from trading his shares when he should not have, regardless of the motivation behind the selling of his shares.
'Those that choose to illegally benefit through insider trading should expect to face the full force of the law', added Mr Kirne.
Following a referral from ASIC in early 2014, the CDPP filed the application on 20 May 2014.
ASIC’s referral related to Mr Gay’s conviction on 23 August 2013 for insider trading in relation to his sale of Gunns shares in early December 2009. This sale was prior to the release of Gunns’ half year results on 22 February 2010. Following this release, the Gunns share price fell substantially.
In addition to the conviction, the sentence for Mr Gay’s insider trading required him to pay a fine of $50,000.
This settlement concludes the CDPP’s application.
CDPP Media contact: firstname.lastname@example.org or 02 6206 5708