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Insider trader makes case for reduced sentence

INSIDE trader John Hartman yesterday exchanged his prison greens for a suit and tie as the NSW Court of Criminal Appeal began the process of re-sentencing the one-time Orion equities dealer.

INSIDE trader John Hartman yesterday exchanged his prison greens for a suit and tie as the NSW Court of Criminal Appeal began the process of re-sentencing the one-time Orion equities dealer.

"We still have to deter 21-year-old masters of the universe," said one of NSW's most senior judges, Justice Anthony Whealy, as the three appeal court judges heard a submission from Hartman's barrister, Timothy Game SC, for a reduced sentence.

When Hartman was sentenced in December last year to 4? years jail and a non-parole period taking him through to December 2013, it turned the spotlight on the financial sector and its enabling of such masters of the universe.

"Paying $350,000 [in one year's salary and bonuses] to a ... graduate in his early 20s carrying out a task of modest responsibility underlines the extent to which the values which underpin our society can be compromised," said the sentencing judge, Justice Peter McClellan.

Mr Game said that in a worst-case scenario, Hartman should have his sentence reduced by 18 months - to three years - and his non-parole reduced by 12 months, to two years. This would make him eligible for parole in December next year.

Hartman was a 20-year-old economics graduate from the University of Sydney when he started with Orion as an equities dealer in 2006. He made more than $1.9 million through his inside knowledge of pending Orion Asset Management trades, in a process known as front running. He did not buy the shares themselves but traded in contracts for difference.

About five of the trades each reaped more than $90,000 profit: in JB Hi-Fi, Goodman Group, Great Southern Ltd, Transpacific Industries Group and two trades in Oxiana that reaped $180,000.

Hartman also pleaded guilty to a further six offences of "tipping", in that he communicated insider information to friend Oliver Curtis.

He told investigators he was a gambling addict, with substantial losses at the Sydney casino and with bookmakers. He repaid $1.59 million under the proceeds of crime legislation.

Mr Game said Hartman assisted ASIC during its investigation of the trading, and other court cases had given greater weight to the idea that contrition was reflected by the assistance given. He also said but for Hartman confessing the tipping offences to investigators, he would not have been charged and should receive an appropriate discount.

As for general deterrence, he pointed out that Hartman was very young at the time and said he had not been properly supervised.

The element of supervision had been referred to by Justice McClellan. "The offender, a person of immature years, was allowed access to market information without effective supervision," he said. "The financial markets industry had "a responsibility to ensure that investors can rely on the integrity of the dealers in the market."

The judges reserved their decision and indicated they would not delay judgment.


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