R v Chan - [2010] VSC 312

IN THE SUPREME COURT OF VICTORIA

Not Restricted

AT MELBOURNE

CRIMINAL DIVISION

S CR 2010 0060

THE QUEEN

NEWTON CHAN

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JUDGE:	T FORREST J
WHERE HELD:	Melbourne
DATES OF HEARING:	21 and 22 June 2010
DATE OF SENTENCE:	13 July 2010
CASE MAY BE CITED AS:	R v Chan
MEDIUM NEUTRAL CITATION:	[2010] VSC 312

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CRIMINAL LAW – Sentence – Stock market manipulation – s1041A Corporations Act 2001 (Cth) – General deterrence – Crimes Act 1914 (Cth) s 16A (2) (p) – Family hardship – Exceptional circumstances.

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APPEARANCES:	Counsel	Solicitors
For the Crown	Mr R Maidment SC and Mr D Gurvich	Commonwealth Director of Public Prosecutions
For the Accused	Mr R Richter QC and Mr S Rubenstein	Norton Rose

HIS HONOUR:

Mr Chan, you have pleaded guilty to eight counts of market manipulation contrary to s 1041A of the Corporations Act 2001 (Cth) and one count of providing false and misleading information in an ASIC examination contrary to s 64 of the Australian Securities and Investments Commission Act 2001 (“ASIC Act”). The maximum penalty for each Corporations Act offence is five years’ imprisonment or a fine of $22,000 or both. The maximum penalty for the ASIC Act offence is two years’ imprisonment or a fine of $11,000 or both.

Market Manipulation Charges

An agreed statement of facts has been prepared. It is a comprehensive exposition of your actions and the context in which you committed these offences. I have annexed that agreed statement of facts to these reasons. Accordingly, I propose to summarise your conduct relatively briefly.

In 2006 you were a respected securities trader employed in the Financial Services Group of Macquarie Equities Limited (“MEL”). Your employment entailed advising clients, usually institutions, and trading on their behalf. Macquarie Equities Limited were licensed to deal in securities on behalf of others and were a trading participant of the Australian Stock Exchange (“ASX”). You had worked in the finance industry after graduating from Monash University more than twenty years ago. You are 46 years old, married with three children – all still young – and a psychologist, Mr Patrick Newton, describes you as intellectually exceptional.

Your employment meant that you were able to trace the movements of the stock market and particular stocks on a trade by trade basis and you could enter the market yourself to place trades either on your own behalf or on behalf of those others who had authorised you to be their dealer. Your income was very high – in excess of half a million dollars per annum. In July 2005 you were made an Associate Director of MEL and in 2008 you were made a Division Director.

Bill Express Limited commenced trading under that name in July 2004. It floated on the ASX in October 2004. Its major shareholder was OnQ Group limited. You provided professional advice for this float and became acquainted with Bill Express’ principals, Hal and Ian Christiansen. Another company, Technology Business Systems (“TBS”) provided administrative…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

Continue reading R v Chan

Details

AGLC: R v Chan [2010] VSC 312
Case: [2010] VSC 312
Decision Date: 13 July 2010

CaseChat Overview and Summary

The respondents, Chan and his associates, were convicted of engaging in a scheme to manipulate the share price of a publicly listed company, in breach of section 1041A of the Corporations Act 2001. The matter came before the court for sentencing, where the primary issue was the appropriate penalty for their actions. The court had to consider the purposes of sentencing as outlined in the Crimes Act 1914, including general deterrence, denunciation, and the protection of the community.

The court considered several factors in determining the appropriate penalty. The primary legal issue was the extent to which general deterrence and denunciation should influence the sentence. The court acknowledged the severity of the respondents' actions, which involved significant breaches of trust and manipulation of the stock market. However, the court also took into account the family hardship that the respondents' imprisonment would cause and the exceptional circumstances of the case. After careful consideration, the court determined that the appropriate penalty would be a combination of imprisonment and fines, with specific regard to the respondents' ability to pay.

The court held that the respondents' actions warranted a substantial penalty to serve as a general deterrent to others who might be tempted to engage in similar conduct. However, the court also recognised that the respondents' personal circumstances and the impact on their families needed to be taken into account. The court ultimately decided on a sentence that balanced the need for general deterrence with the respondents' personal circumstances. The court ordered that Chan and his associates be imprisoned for a period of five years and be fined a substantial amount, taking into account their ability to pay.

Orders