The former CEO and director of biotech company Sirtex Medical, Gilman Edwin Wong (pictured), has pleaded guilty to one charge of insider trading.
Wong was committed to the Sydney District Court for sentencing on a date to be fixed.
The charge of insider trading relates to Wong's sale of 74,698 shares on 26 October 2016 while in possession of inside information.
Even though Sirtex announced double-digit growth would continue in FY17 and that claim was reiterated by Wong at the company's AGM, the day after the meeting he sold the shares for a value of almost $2.14 million.
In December 2016, Sirtex then lowered its worldwide first half sales growth expectations to 4-6 per cent, sending the share price plummeting down 37 per cent.
It is estimated that Wong's early sale of those shares would have saved him around $1 million.
The maximum penalty for an insider trading offence is 10 years' imprisonment.
The development comes amidst a shareholder class action, funded by IMF Bentham and conducted by Maurice Blackburn Lawyers, against Sirtex and Wong's alleged conduct.
The class action commenced in the Federal Court in Melbourne on 27 May 2019.
The shareholder class action alleges contraventions of the ASIC Act, Corporations Act and the Australian Consumer Law in seeking to establish that the company engaged in misleading or deceptive conduct and/or breached its continuous disclosure obligations.
Class Actions Principal Lawyer at Maurice Blackburn, Ben Slade, said the events were deeply troubling.
"When a CEO dumps more than $2 million worth of stock shortly before the company releases a surprise announcement of a severe decline in earnings and sales growth, and investors then suffer a 37 per cent share price dive off the back of that, it is fair to question a company's compliance with continuous disclosure laws," says Slade.
"The ongoing integrity of the market and future investment in it demands that proper corporate conduct standards are adhered to or held accountable when flouted."
The initial charges made by the Australian Securities and Investment Commission in September 2018 came just days after Sirtex Medical delisted from the ASX, following its takeover by China's CDH Investments for $1.9 billion.
Business News Australia
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