THE former head of Lonsec broking firm, Norman John Graham, has been charged with 14 counts of insider trading over alleged transactions in shares of Clean Seas Tuna Ltd just before the release of figures that showed a slump in the fish-farming company's prospects.
Mr Graham, 52, of Barwon Heads in Victoria, appeared yesterday in the Melbourne Magistrates Court on charges that he sold shares in Clean Seas when he was in possession of information about the death of bluefin tuna fingerlings and the prospects of Clean Seas' kingfish stocks.
Lonsec underwrote Clean Seas Tuna's float on the sharemarket in December 2005 and it assisted the fish-farming company in many subsequent capital raisings.
Mr Graham resigned as a director of Lonsec in October 2010.
The 14 counts of insider trading against him have been brought by the Australian Securities and Investments Commission, which said it launched an investigation after a referral from the Australian Securities Exchange.
This is the second set of insider charges to be laid against a Melbourne businessman in two days. On Wednesday, Alex Eberg, 44, of Caulfield North, was charged with a single count of insider trading related to the sale of shares in Environmental Clean Technologies in January 2009.
In the latest case, ASIC alleges Mr Graham received information about the growth in Clean Seas' kingfish stocks and the company's financial results in early February 2010.
The regulator alleges he sold a total of 286,407 Clean Seas shares, held by various related accounts, on February 1 and February 23, 2010.
It further alleges he sold 400,000 Clean Seas shares for a client's account between February 12 and 23, and that on February 26, just before the company released its half-year results, he sold 200,000 shares from the accounts of two of his clients.
ASIC alleges that during all these trades Mr Graham was in possession of inside information about Clean Seas. Clean Seas shares traded around 23? and 24.5? between February 1 and 23, 2010.
On February 26, Clean Seas released its half-year figures showing interim losses had increased from $6.7 million to $14.2 million, prompting a plunge in the price to 9.1?.
Lonsec told BusinessDay that the firm became aware of ASIC's investigation in August 2010 when it received formal notices requesting it to provide information.
"While we do not comment on the relationship we have had with former employees, we can say that Mr Graham resigned from Lonsec effective 13 October 2010 after more than 10 years employment," Lonsec director Jason Clarke said. "It is our understanding that Lonsec Ltd is not the object of the investigation conducted by ASIC. It is also our understanding that apart from the former managing director, no current or former Lonsec employees or officer is the subject of ASIC's investigation.
"Lonsec has a strong compliance culture and we are co-operating fully with ASIC. We expect our clients will understand this."
Mr Graham was not required to enter a plea. If found guilty, he faces as much as five years in jail or a fine of $220,000 for each instance of the offence. The matter has been adjourned until August 6.