A former general manager at Melbourne-based pharmaceutical company Sigma Healthcare (ASX: SIG) has been slapped with fines worth more than $100,000 after pleading guilty to insider trading today.
In June 2018, Michael Story sold 250,000 SIG shares for $202,629 while he was in possession of inside information that a wholesale supply agreement between Sigma and Chemist Warehouse Group (CWG) would soon lapse.
The following month, Sigma publicly announced that its supply contract with Chemist Warehouse would cease on 30 June 2019. After this news, the company’s shares plunged 40 per cent compared to the previous day.
The court found Story sold his SIG shares prior to the market announcement as he knew it was unlikely the contract would be renewed and that it would have had a material effect on SIG’s share price.
Story was ordered to pay a fine of $30,000 and a penalty of $70,179.37 under the Proceeds of Crime Act, which represents the benefit he obtained from his insider trading.
While Story was sentenced to 14 months' imprisonment, the court ordered his release upon a recognizance in the sum of $5,000 and on the condition of good behaviour for three years.
Had the former general manager not pleaded guilty, he would have faced up to two years’ imprisonment, to be released after 14 months upon a recognizance.
“Story was a true insider, an individual with sensitive company information that he knew would affect the share price,” Australian Securities & Investments Commission (ASIC) deputy chair Sarah Court said.
“He sold his shares with inside information, giving him an unfair advantage.
“This criminal conduct threatens the integrity of Australia’s financial markets. ASIC will continue to pursue cases of using inside information to illegally trade on our markets.”
Judge Moglia denounced the inherent dishonesty in Story’s conduct and found him to be a true insider with no explanation for his conduct other than an attempt to avoid significant losses.
The charges were initially brought forward by ASIC in October 2020. The Commonwealth Director of Public Prosecutions prosecuted the matter after a brief and referral from ASIC.
Established in 1912, Sigma Healthcare has one of the largest pharmacy networks in Australia, with over 1,200 branded and independent stores.
Help us deliver quality journalism to you.
As a free and independent news site providing daily updates
during a period of unprecedented challenges for businesses everywhere
we call on your support