Ex-Gunns chairman is fined $50,000
Gay, the former chairman of failed timber giant Gunns, left the dock after he was convicted in the Tasmanian Supreme Court and fined $50,000. He was banned from managing corporations for five years, but escaped a prison term.
The Australian Securities and Investments Commission said the conviction showed the regulator was committed to combating insider trading.
But legal experts said the penalty sent a weak message. "There's going to be plenty of people who will be disappointed with the sentencing judgment, and .., I think it's fair to say that [ASIC] will be disappointed," said Professor Ian Ramsay, a corporate law expert at Melbourne University.
"It's as if the public attention given to this insider trading case, and no doubt the loss of reputation, was [considered] more significant than a financial penalty for someone of his financial means."
The Australian Shareholders Association said the sentence was disappointingly light. "This was the first time that an ASX100 chairman pleaded guilty to insider trading, and the judge missed a golden opportunity to send a wider deterrence message," chairman Ian Curry said.
John Sutton, a partner at Armstrong Legal, said the court's decision seemed "remarkable"."I find the result to be astounding ... the extent of the notional investment is $3 million and in NSW people will get custody, or an alternative to custody, for a lot less than that."
Gay was found by Justice David Porter to be of exemplary character. His crime, while serious, didn't deserve imprisonment, the judge said.
The court heard Gay avoided a loss of $798,000 by selling Gunns shares in December 2009 after a report to directors revealed a revenue collapse, disclosed to the market in February 2010, when the share price fell 20¢.
As his trial was due to begin earlier in August, Gay changed his plea to guilty on a single charge over the sale of 3.4 million shares worth about $3 million.
Frequently Asked Questions about this Article…
John Gay, former chairman of timber company Gunns, was convicted of insider trading in the Tasmanian Supreme Court. He pleaded guilty to a single charge over the sale of 3.4 million Gunns shares worth about $3 million, was fined $50,000 and banned from managing corporations for five years, but avoided a prison term.
The court found Gay sold Gunns shares in December 2009 after information to directors revealed a revenue collapse that was publicly disclosed in February 2010 (when the share price fell about 20¢). The sale avoided a potential loss of $798,000. Justice David Porter convicted him of insider trading and imposed a $50,000 fine plus a five-year ban on managing corporations.
The court heard Gay avoided a loss of $798,000 by selling his 3.4 million Gunns shares in December 2009 prior to the market disclosure in February 2010.
ASIC said the conviction demonstrated the regulator's commitment to combating insider trading, highlighting that enforcement action was being taken against senior executives who breach market rules.
Legal experts and the Australian Shareholders Association described the penalty as light. Professor Ian Ramsay and ASA chairman Ian Curry said many would be disappointed the sentence didn’t send a stronger deterrent message, and a legal partner called the outcome 'remarkable' and 'astounding.'
Justice David Porter found John Gay to be a person of exemplary character and concluded that, although the offence was serious, it did not merit imprisonment in his view.
Yes. The case attracted public attention as it involved a former ASX100 chairman and raised questions about penalties for insider trading. The Australian Shareholders Association said the sentence missed an opportunity to send a wider deterrence message, which is relevant to investor confidence and corporate accountability.
According to the Australian Shareholders Association quoted in the article, this was the first time an ASX100 chairman pleaded guilty to insider trading.
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