Supreme Court
New South Wales
Medium Neutral Citation: R v De Silva [2011] NSWSC 243 Hearing dates: 28 February 2011, 16 March 2011 Decision date: 31 March 2011 Before: Buddin J Decision: Sentenced to a term of imprisonment of 2 years 6 months to commence on 16 January 2011 and to expire on 15 July 2013. Direct that the offender be released on 15 July 2012 at the expiration of 18 months of that sentence on a recognisance that he be of good behaviour during the balance of the term upon giving security in the sum of $1000 without surety.
Catchwords: CRIMINAL LAW - sentencing - insider trading - "true insider" - plea of guilty - other favourable subjective features Legislation Cited: Corporations Act 2001 (Cth)
Crimes Act 1914 (Cth)Cases Cited: Cameron v The Queen (2002) 209 CLR 339
DPP v O'Reilly [2010] VSC 138
Hili and Jones v R (2010) 272 ALR 465
Leighton v R [2010] NSWCCA 280
R v Doff (2005) 54 ACSR 200; [2005] NSWCCA 119
DPP v El Karhani (1990) 21 NSWLR 370
R v El Rashid, NSWCCA unreported, 7 April 1995
R v Ferrer-Esis (1991) 55 A Crim R 231
R v Firns (2001) 51 NSWLR 548
R v Gay [2002] NSWCCA 6
R v Hannes (2002) 173 FLR
R v Hartman [2010] NSWSC 1422
R v McQuoid [2009] EWCA Crim 1301; [2009] 4 All ER 388
R v Morgan (1993) 70 A Crim R 368
R v Penalosa-Munoz (2004) 143 A Crim R 594
R v Rivkin (2003) 198 ALR 400
R v Rivkin (2004) 184 FLR 365
R v Smith (1987) 27 A Crim R 315
The Queen v Shrestha (1991) 173 CLR 48Category: Sentence Parties: Regina (Crown)
Oswyn Indra De Silva (Offender)Representation: Counsel:
P McGuire/ B Hatfield (Crown)
G Bellew S/C (Offender)
Solicitors:
Commonwealth Director of Public Prosecutions (Crown)
Armstrong Legal (Offender)
File Number(s): 2010/313774
Judgment
Oswyn Indra De Silva (the offender) pleaded guilty to an indictment which alleged that:
Between about 20 December 2006 and about 26 April 2007 at Sydney in the State of New South Wales, [he] acquired relevant Division 3 financial products namely securities, or contracts for difference ("CFDs") in respect of securities ("the financial products") whilst in possession of inside information concerning those financial products that was not generally available, being information which if it were generally available a reasonable person would expect it to have a material effect on the price or value of the financial products, and being information which [he] knew or ought reasonably to have known:
(i) was not generally available, and
(ii) if it were generally available, a reasonable person would expect it to have a material effect on the price or value of the financial products.
The offence to which the offender pleaded guilty is commonly referred to as "insider trading". At the relevant time the maximum penalty for the offence was imprisonment for 5 years and/or a fine of $220,000. [The maximum penalty has now…
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- AGLC
- R v De Silva [2011] NSWSC 243
- Case
- [2011] NSWSC 243
- Decision Date
CaseChat Overview and Summary
The legal issues before the court included determining the appropriate sentence for the offender, considering both the seriousness of the offence and various mitigating factors. Key considerations included whether the offender was a "true insider," the extent of his knowledge and access to confidential information, and the impact of his actions on the financial markets. The court also had to weigh other favourable subjective features, such as the offender's otherwise unblemished character and his cooperation with authorities, against the gravity of his misconduct.
The court found that the offender was indeed a "true insider" due to his position and responsibilities within MIML, which granted him access to critical information about large-scale trades in the Asia region. However, the court also acknowledged the offender's early guilty plea and other mitigating factors, which included his lack of personal financial gain and his remorse. After balancing these considerations, the court determined an appropriate sentence that reflected both the need for deterrence and the circumstances of the offender.
The final orders of the court included a sentence that, while acknowledging the severity of the insider trading offences, also recognised the offender's cooperation and other mitigating factors. The specific sentence was not detailed in the provided excerpt, but it would have taken into account the principles of justice and the need to uphold the integrity of financial markets.
Orders
Orders of the court
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Background
Background to the litigation
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Evidence
Evidence Before The Court
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Decision
Reasons for decision
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Ratio Decidendi
Legal Principle Established
FMG was Macquarie Group's principal funds management business. This business was conducted predominantly through Macquarie Investments Management Limited ("MIML"), a corporation formed in Australia which held an Australian Financial Services Licence that was issued pursuant to the Corporations Act 2001 (Cth) . It acted as: FMG's business was structured into divisions based around asset classes. One of the divisions was the Real Estate Securities Division ("RES"). The RES was responsible for investment decisions for any investments in real estate related securities made by any of the Funds. The RES, in turn, structured its business into four different geographical locations: namely the United States, Europe, Asia and Australia. The offender worked within RES as the Portfolio Manager responsible for Asia. In that capacity the offender had sole responsibility for: RES maintained an electronic spreadsheet, referred to as the "Trade Calculator", into which the following information was entered on a daily basis: The Trade Calculator showed the difference between the Funds' actual holdings and the model portfolio, and generated the trade orders that needed to be placed by MIML on the Funds' behalf in order to align the Funds' holdings to the model portfolio. The offender had regular access throughout his working day to the Trade Calculator in his capacity as Portfolio Manager. The offender was also primarily responsible for issuing instructions to MIML's two main brokers who were located in Hong Kong in relation to the trade orders which were required in order to align each of the Fund's investments with the model portfolio. Execution of the trade orders resulted in securities being bought and sold by MIML as the responsible entity and investment manager on behalf of the Funds. Aligning the Funds' investments to the model portfolio often involved acquiring large volumes of particular securities. That was particularly the case in the period between December 2006 and April 2007. During that period MIML was the investment manager for two Korean funds, the Korean Global Property Securities Fund and the Korean Asian Real Estate Securities Fund (which in combination constituted "the Korean Funds"), which were growing rapidly. The result was that the RES received very large inflows of cash for investment every couple of days. The amounts involved were regularly in the order of hundreds of millions of US dollars per week. During this period most of the trading by MIML for which the offender was responsible, was undertaken on behalf of Foreign Funds. By virtue of his position with FMG, the offender routinely gained advance knowledge of proposed trades by MIML on the Funds' behalf in Asia. This included information concerning the proposed acquisitions of large volumes of particular securities on the Singapore Stock Exchange ("SGX") during the relevant period. From his knowledge and experience in relation to financial markets, the offender was aware, at all relevant times, that acquisitions of large volumes of particular securities could have the effect of increasing the market price of those securities within a short time frame.