R v Hartman

[2010] NSWSC 1422

Reported Decision: 81 ACSR 121

New South Wales

Supreme Court

CITATION:	R v Hartman [2010] NSWSC 1422
HEARING DATE(S):	22 November 2010
JUDGMENT DATE :	2 December 2010
JURISDICTION:	Criminal
JUDGMENT OF:	McClellan CJatCL
DECISION:	In relation to count 1, having regard to the matters on the schedule 1 annexed to these remarks, I sentence you to a term of imprisonment of three years commencing on 2 December 2010 and expiring on 1 December 2013. In relation to counts 2 to 19 I sentence you to a term of two years imprisonment, each term to commence on 2 December 2010 and expire on 1 December 2012. In relation to count 20, having regard to the schedule offences in respect of that count, I sentence you to a term of two years imprisonment to commence on 2 June 2013 and expiring on 1 June 2015. In relation to counts 21 to 25 I sentence you to a term of eighteen months imprisonment to commence on 2 June 2013 and expire on 1 December 2014. The overall term of the sentence is 4½ years. A non-parole period of three years commencing on 2 December 2010 and expiring on 1 December 2013 on which day the offender will be eligible for release to parole.
CATCHWORDS:	CRIMINAL LAW - sentence - plea of guilty to insider trading and tipping offences in contravention of s 1043A(1) and 1043A(2) of the Corporations Act 2001 (Cth) - nature of criminality involved buying and selling Contracts for Difference in shares of an entity on the personal market account of the offender whilst possessing information concerning the proposed intention of offender's employer in shares of the particular entity - offender passed on inside information obtained during employment to a friend who used the information to acquire and dispose of financial products - application of Ellis discount - significance of general deterrence with respect to white collar crime offences
LEGISLATION CITED:	Corporations Act 2001 (Cth) Crimes Act 1900 Proceeds of Crimes Act
CATEGORY:	Sentence
CASES CITED:	R v Ellis (1986) 6 NSWLR 603
PARTIES:	The Crown John Joseph Hartman (Offender)
FILE NUMBER(S):	SC 2010/65592
COUNSEL:	D Staehli SC (Crown) T Game SC/S Buchen (Offender)
SOLICITORS:	Director of Public Prosecutions Commonwealth Johnson Winter & Slattery (Offender)

- 39 -

IN THE SUPREME COURT
OF NEW SOUTH WALES
COMMON LAW DIVISION
CRIMINAL LIST

McCLELLAN CJ at CL

THURSDAY 2 DECEMBER 2010

2010/65592 R v HARTMAN, John Joseph

JUDGMENT

1 HIS HONOUR: The offender, John Joseph Hartman, has pleaded guilty to 19 offences contrary to s 1043A(1) of the Corporation Act 2001, (commonly known an “insider trading”), and six offences contrary to s 1043A(2) of that Act, (commonly known as “tipping”). The offences can also be described as “front running”. Front running is a form of insider trading which occurs where a person, typically a trader who is aware of a pending order in a stock which is likely to affect its price, trades in the stock or a derivative prior to the execution of the order and then, following the execution of the order, trades in it again, intending to take advantage of the anticipated rise or fall in the stock price, an advantage not available to a person who is unaware of the pending order.

2 The offender was arraigned on an indictment. I am not going to read the whole indictment unless counsel require me to do so, but what I will do is just read the first of each category of offence which reads as follows:

“The Director of Public Prosecutions of the Commonwealth of Australia, who prosecutes in this behalf for Her Majesty, charges on 15 November 2010 that
JOHN JOSEPH HARTMAN

1. Between about 10.45am and 2.20pm on 25 July 2008 at Sydney in the State of New South Wales, acquired relevant Division 3 financial products, being 987,018 Short Contracts For Difference in Henderson Group P/L (HGI) ("the financial products"), whilst in possession of inside information concerning HGI that was not generally available, being information which if it was generally available a reasonable person would expect to have a material effect on the price of the financial products, and being information which the defendant 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.

3 That charge was particularised as follows:

“Particulars
The defendant knew that his disposing of a large volume of HGI shares on behalf of Orion Asset Management Limited on 25 July 2008 on the Australian Securities Exchange would have the effect of lowering the price of HGI shares.”

4 Count 20 in the indictment is in the following terms:

“And the said Director of Public Prosecutions further charges that

JOHN JOSEPH HARTMAN

20. Between about 27 March 2006 and 3 August 2007 at Sydney in the State of New South Wales, whilst in possession of inside information concerning the shares in Transpacific Industries Group Ltd (TPI) ("the financial products"), that was not generally available, being information which if it was generally available a reasonable person would expect to have a material effect on the price of the financial products, and being information which the defendant 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, and which financial products were able to be traded on a financial market operated in Australia, directly communicated the inside information to another, namely Oliver Curtis, knowing that Oliver Curtis would, or would be likely to acquire relevant Division 3 financial products, namely 55,000 Long Contracts For Difference (CFD) in TPI.”

5 That count was particularised in the following terms:

“Particulars of Communication of Inside Information

(i) Between about 27 March 2006 and 3 August 2007 the defendant communicated to Oliver Curtis that the defendant was required to acquire or dispose of a large volume of shares on behalf of Orion Asset Management Limited in entities listed on the Australian Stock Exchange (ASX) which had the effect of raising or lowering respectively the price of shares in the entities on the ASX.
(ii) On or about 3 August 2007 the defendant sent a text message to Oliver Curtis to acquire 55,000 Long CFD's in TPI on that day.”

6 The offender also asks that 14 offences included on the schedule which is annexure 1 to these remarks, pursuant to s 16BA1, be taken into account in respect of the insider trading offences and 18 offences included on the schedule, annexure 2 to these remarks, be taken into account in respect of the tipping offence.

7 The maximum penalty for each offence is imprisonment for five years and/or a fine of $220,000. The offences are Commonwealth offences and accordingly the appropriate sentence must be determined having regard to the sentencing regime provided in part 1B of the Crimes Act. Section 16A(2) of that Act specifies various matters which must be taken into account in the sentencing of federal offenders.

8 The full indictment reads as follows:

“The Director of Public Prosecutions of the Commonwealth of Australia, who prosecutes in this behalf for Her Majesty, charges on 15 November 2010 that
JOHN JOSEPH HARTMAN

1. Between about 10.45am and 2.20pm on 25 July 2008 at Sydney in the State of New South Wales, acquired relevant Division 3 financial products, being 987,018 Short Contracts For Difference in Henderson Group P/L (HGI) ("the financial products"), whilst in possession of inside information concerning HGI that was not generally available, being information which if it was generally available a reasonable person would expect to have a material effect on the price of the financial products, and being information which the defendant 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.

Particulars
The defendant knew that his disposing of a large volume of HGI shares on behalf of Orion Asset Management Limited on 25 July 2008 on the Australian Securities Exchange would have the effect of lowering the price of HGI shares.

And the said Director of Public Prosecutions further charges that

JOHN JOSEPH HARTMAN

2. Between about 2.23pm and 2.24pm on 25 July 2008 at Sydney in the State of New South Wales, disposed of relevant Division 3 financial products, being 987,018 Short Contracts For Difference in Henderson Group P/L (HGI) ("the financial products"), whilst in possession of inside information concerning HGI that was not generally available, being information which if it was generally available a reasonable person would expect to have a material effect on the price of the financial products, and being information which the defendant 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.

Particulars
The defendant knew that his disposal of HGI shares on behalf of Orion Asset Management Limited on 25 July 2008 on the Australian Securities Exchange would soon cease and thereby end the effect of this trading to lower the price of HGI shares.

And the said Director of Public Prosecutions further charges that

JOHN JOSEPH HARTMAN

3. Between about 11.14am and 2.52pm on 29 July 2008 at Sydney in the State of New South Wales, acquired relevant Division 3 financial products, being 563,379 Long Contracts For Difference in Alumina Limited (AWC) ("the financial products"), whilst in possession of inside information concerning AWC that was not generally available, being information which if it was generally available a reasonable person would expect to have a material effect on the price of the financial products, and being information which the defendant 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.

Particulars
The defendant knew that his acquisition of AWC shares on behalf of Orion Asset Management Limited on 29 July 2008 on the Australian Securities Exchange would have the effect of raising the price of AWC shares.

And the said Director of Public Prosecutions further charges that

JOHN JOSEPH HARTMAN

4. Between about 2.51pm and 2.54pm on 29 July 2008 at Sydney in the State of New South Wales, disposed relevant Division 3 financial products, being 563,379 Long Contracts For Difference in Alumina Limited (AWC) ("the financial products"), whilst in possession of inside information concerning AWC that was not generally available, being information which if it was generally available a reasonable person would expect to have a material effect on the price of the financial products, and being information which the defendant 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.

Particulars
The defendant knew that his acquisition of AWC shares on behalf of Orion Asset Management Limited on 29 July 2008 on the Australian Securities Exchange would soon cease and thereby end the effect of this trading to raise the price of AWC shares.

And the said Director of Public Prosecutions further charges that

JOHN JOSEPH HARTMAN

5. Between about 1.40pm and 3.42pm on 6 August 2008 at Sydney in the State of New South Wales, acquired relevant Division 3 financial products, being 517,050 Long Contracts For Difference in Riversdale Mining Ltd (RIV) ("the financial products"), whilst in possession of inside information concerning RIV that was not generally available, being information which if it was generally available a reasonable person would expect to have a material effect on the price of the financial products, and being information which the defendant 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.

Particulars
The defendant knew that his acquisition of a large volume of RIV shares on behalf of Orion Asset Management Limited on 6 August 2008 on the Australian Securities Exchange would have the effect of raising the price of RIV shares.
And the said Director of Public Prosecutions further charges that

JOHN JOSEPH HARTMAN

6. Between about 3.55pm and 3.58pm on 6 August 2008 at Sydney in the State of New South Wales, disposed of relevant Division 3 financial products, being 517,050 Long Contracts For Difference in Riversdale Mining Ltd (RIV) ("the financial products"), whilst in possession of inside information concerning RIV that was not generally available, being information which if it was generally available a reasonable person would expect to have a material effect on the price of the financial products, and being information which the defendant 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.

Particulars
The defendant knew that his acquisition of RIV shares on behalf of Orion Asset Management Limited on 6 August 2008 on the Australian Securities Exchange would soon cease and thereby end the effect of this trading to raise the price of RIV shares.
And the said Director of Public Prosecutions further charges that

JOHN JOSEPH HARTMAN

7. Between about 10.48am and 3.42pm on 18 August 2008 at Sydney in the State of New South Wales, acquired relevant Division 3 financial products, being 2,214,788 Short Contracts For Difference in CSR Limited (CSR) ("the financial products"), whilst in possession of inside information concerning CSR that was not generally available, being information which if it was generally available a reasonable person would expect to have a material effect on the price of the financial products, and being information which the defendant 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.

Particulars
The defendant knew that his disposal of a large volume of CSR shares on behalf of Orion Asset Management Limited on 18 August 2008 on the Australian Securities Exchange would have the effect of lowering the price of CSR shares.
And the said Director of Public Prosecutions further charges that

JOHN JOSEPH HARTMAN

8. Between about 3.41pm and 3.43pm on 18 August 2008 at Sydney in the State of New South Wales, disposed relevant Division 3 financial products, being 2,214,788 Short Contracts For Difference in CSR Limited (CSR) ("the financial products"), whilst in possession of inside information concerning CSR that was not generally available, being information which if it was generally available a reasonable person would expect to have a material effect on the price of the financial products, and being information which the defendant 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.

Particulars
The defendant knew that his disposal of CSR shares on behalf of Orion Asset Management Limited 18 August 2008 on the Australian Securities Exchange would soon cease and thereby end the effect of this trading to lower the price of CSR shares.
And the said Director of Public Prosecutions further charges that

JOHN JOSEPH HARTMAN

9. Between about 10.34am and 3.54pm on 20 August 2008 at Sydney in the State of New South Wales, acquired relevant Division 3 financial products, being 804,704 Long Contracts For Difference in Suncorp-Metway Limited (SUN) ("the financial products"), whilst in possession of inside information concerning SUN that was not generally available, being information which if it was generally available a reasonable person would expect to have a material effect on the price of the financial products, and being information which the defendant 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.

Particulars
The defendant knew that his acquisition of a large volume of SUN shares on behalf of Orion Asset Management Limited on 20 August 2008 on the Australian Securities Exchange would have the effect of raising the price of SUN shares.
And the said Director of Public Prosecutions further charges that

JOHN JOSEPH HARTMAN

10. Between about 12.21pm and 12.31pm on 21 August 2008 at Sydney in the State of New South Wales, disposed relevant Division 3 financial products, being 804,704 Long Contracts For Difference in Suncorp-Metway Limited (SUN) ("the financial products"), whilst in possession of inside information concerning SUN that was not generally available, being information which if it was generally available a reasonable person would expect to have a material effect on the price of the financial products, and being information which the defendant 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.

Particulars
The defendant knew that his acquisition of SUN shares on behalf of Orion Asset Management Limited on 21 August 2008 on the Australian Securities Exchange would soon cease and thereby end the effect of this trading to raise the price of SUN shares.
And the said Director of Public Prosecutions further charges that
JOHN JOSEPH HARTMAN

11. Between about 2.14pm and 2.29pm on 18 September 2008 at Sydney in the State of New South Wales, acquired relevant Division 3 financial products, being 629,231 Long Contracts For Difference in Queensland Gas Company Ltd (QGC) ("the financial* products"), whilst in possession of inside information concerning QGC that was not generally available, being information which if it was generally available a reasonable person would expect to have a material effect on the price of the financial products, and being information which the defendant 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.

Particulars
The defendant knew that his acquisition of a large volume of QGC shares on behalf of Orion Asset Management Limited on 18 September 2008 on the Australian Securities Exchange would have the effect of raising the price of QGC shares.
And the said Director of Public Prosecutions further charges that

JOHN JOSEPH HARTMAN

12. Between about 10.07am and 10.13am on 19 September 2008 at Sydney in the State of New South Wales, disposed of relevant Division 3 financial products, being 629,231 Long Contracts For Difference in Queensland Gas Company Ltd (QGC) ("the financial products"), whilst in possession of inside information concerning QGC that was not generally available, being information which if it was generally available a reasonable person would expect to have a material effect on the price of the financial products, and being information which the defendant 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.

Particulars
The defendant knew that his acquisition of QGC shares on behalf of Orion Asset Management Limited on 19 September 2008 on the Australian Securities Exchange would soon cease and thereby end the effect of this trading to raise the price of QGC shares.
And the said Director of Public Prosecutions further charges that

JOHN JOSEPH HARTMAN

13. Between about 10.34am and 11.01am on 19 September 2008 at Sydney in the State of New South Wales, acquired relevant Division 3 financial products, being 461,000 Long Contracts For Difference in AMP Limited (AMP) ("the financial products"), whilst in possession of inside information concerning AMP that was not generally available, being information which if it was generally available a reasonable person would expect to have a material effect on the price of the financial products, and being information which the defendant 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.

Particulars
The defendant knew that his acquisition of a large volume of AMP shares on behalf of Orion Asset Management Limited on 19 September 2008 on the Australian Securities Exchange would have the effect of raising the price of AMP shares.
And the said Director of Public Prosecutions further charges that

JOHN JOSEPH HARTMAN

14. Between about 12.00pm and 12.02pm on 19 September 2008 at Sydney in the State of New South Wales, disposed relevant Division 3 financial products, being 461,000 Long Contracts For Difference in AMP Limited (AMP) ("the financial products"), whilst in possession of inside information concerning AMP that was not generally available, being information which if it was generally available a reasonable person would expect to have a material effect on the price of the financial products, and being information which the defendant 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.

Particulars
The defendant knew that his acquisition of AMP shares on behalf of Orion Asset Management Limited on 19 September 2008 on the Australian Securities Exchange would soon cease and thereby end the effect of this trading to raise the price of AMP shares.
And the said Director of Public Prosecutions further charges that

JOHN JOSEPH HARTMAN

15. Between about 12.08pm and 12.19pm on 3 December 2008 at Sydney in the State of New South Wales, disposed relevant Division 3 financial products, being 300,000 Long Contracts For Difference in Caltex Ltd (CTX) ("the financial products"), whilst in possession of inside information concerning CTX that was not generally available, being information which if it was generally available a reasonable person would expect to have a material effect on the price of the financial products, and being information which the defendant 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
Particulars
The defendant knew that his acquisition of a large volume of CTX shares on behalf of Orion Asset Management Limited on 3 December 2008 on the Australian Securities Exchange would have the effect of raising the price of CTX shares.
And the said Director of Public Prosecutions further charges that

JOHN JOSEPH HARTMAN

16. Between about 2.30pm and 2.33pm on 3 December 2008 at Sydney in the State of New South Wales, disposed relevant Division 3 financial products, being 300,000 Long Contracts For Difference in Caltex Ltd (CTX) ("the financial products"), whilst in possession of inside information concerning CTX that was not generally available, being information which if it was generally available a reasonable person would expect to have a material effect on the price of the financial products, and being information which the defendant 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.

Particulars
The defendant knew that his acquisition of CTX shares on behalf of Orion Asset Management Limited on 3 December 2008 on the Australian Securities Exchange would soon cease and thereby end the effect of this trading to raise the price of CTX shares.
And the said Director of Public Prosecutions further charges that

JOHN JOSEPH HARTMAN

17. Between about 3.19pm and 4.12pm on 6 January 2009 at Sydney in the State of New South Wales, acquired relevant Division 3 financial products, being 58,565 Short Contracts For Difference in Riversdale Mining Ltd (RIV) ("the financial products"), whilst in possession of inside information concerning RIV that was not generally available, being information which if it was generally available a reasonable person would expect to have a material effect on the price of the financial products, and being information which the defendant 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.

Particulars
The defendant knew that his disposal of a large volume of RIV shares on behalf of Orion Asset Management Limited on 6 January 2009 on the Australian Securities Exchange would have the effect of lowering the price of RIV shares.
And the said Director of Public Prosecutions further charges that

JOHN JOSEPH HARTMAN

18. Between about 10.07am and 11.48am on 7 January 2009 at Sydney in the State of New South Wales, acquired relevant Division 3 financial products, being 253,735 Short Contracts For Difference in Riversdale Mining Ltd (RIV) ("the financial products"), whilst in possession of inside information concerning RIV that was not generally available, being information which if it was generally available a reasonable person would expect to have a material effect on the price of the financial products, and being information which the defendant 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.

Particulars
The defendant knew that his disposal of a large volume of RIV shares on behalf of Orion Asset Management Limited on 7 January 2009 on the Australian Securities Exchange would have the effect of lowering the price of RIV shares.
And the said Director of Public Prosecutions further charges that
JOHN JOSEPH HARTMAN

19. Between about 10.14am and 10.17am on 8 January 2009 at Sydney in the State of New South Wales, disposed relevant Division 3 financial products, being 312,000 Short Contracts For Difference in Riversdale Mining Ltd (RIV) ("the financial products"), whilst in possession of inside information concerning RIV that was not generally available, being information which if it was generally available a reasonable person would expect to have a material effect on the price of the financial products, and being information which the defendant 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.

Particulars
The defendant knew that his disposal of RIV shares on behalf of Orion Asset Management Limited on 6 and 7 January 2009 on the Australian Securities Exchange would soon cease and thereby end the effect of this trading to lower the price of RIV shares.
And the said Director of Public Prosecutions further charges that

JOHN JOSEPH HARTMAN

20. Between about 27 March 2006 and 3 August 2007 at Sydney in the State of New South Wales, whilst in possession of inside information concerning the shares in Transpacific Industries Group Ltd (TPI) ("the financial products"), that was not generally available, being information which if it was generally available a reasonable person would expect to have a material effect on the price of the financial products, and being information which the defendant 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, and which financial products were able to be traded on a financial market operated in Australia, directly communicated the inside information to another, namely Oliver Curtis, knowing that Oliver Curtis would, or would be likely to acquire relevant Division 3 financial products, namely 55,000 Long Contracts For Difference (CFD) in TPI.


Particulars of Communication of Inside Information

(i) Between about 27 March 2006 and 3 August 2007 the defendant communicated to Oliver Curtis that the defendant was required to acquire or dispose of a large volume of shares on behalf of Orion Asset Management Limited in entities listed on the Australian Stock Exchange (ASX) which had the effect of raising or lowering respectively the price of shares in the entities on the ASX.
(ii) On or about 3 August 2007 the defendant sent a text message to Oliver Curtis to acquire 55,000 Long CFD's in TPI on that day.
And the said Director of Public Prosecutions further charges that

JOHN JOSEPH HARTMAN

21. Between about 27 March 2006 and 19 October 2007 at Sydney in the State of New South Wales, whilst in possession of inside information concerning the shares in Energy Resources of Australia Ltd (ERA) ("the financial products"), that was not generally available, being information which if it was generally available a reasonable person would expect to have a material effect on the price of the financial products, and being information which the defendant knew, or ought reasonably to have known:
(i) was not generally available, and
(iii) 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 which financial products were able to be traded on a financial market operated in Australia, directly communicated the inside information to another, namely Oliver Curtis, knowing that Oliver Curtis would, or would be likely to acquire relevant Division 3 financial products, namely 60,000 Short Contracts For Difference (CFD) in ERA.

Particulars of Communication of Inside Information
(i) Between about 27 March 2006 and 19 October 2007 the defendant communicated to Oliver Curtis that the defendant was required to acquire or dispose of a large volume of shares on behalf of Orion Asset Management Limited in entities listed on the Australian Stock Exchange (ASX) which had the effect of raising or lowering respectively the price of shares in the entities on the ASX.
(ii) On or about 19 October 2007 the defendant sent a text message to Oliver Curtis to acquire 60,000 Short CFD's in ERA on that day.
And the said Director of Public Prosecutions further charges that

JOHN JOSEPH HARTMAN

22. Between about 27 March 2006 and 21 November 2007 at Sydney in the State of New South Wales, whilst in possession of inside information concerning the shares in CSR Ltd (CSR) ("the financial products"), that was not generally available, being information which if it was generally available a reasonable person would expect to have a material effect on the price of the financial products, and being information which the defendant 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, and which financial products were able to be traded on a financial market operated in Australia, directly communicated the inside information to another, namely Oliver Curtis, knowing that Oliver Curtis would, or would be likely to acquire relevant Division 3 financial products, namely 400,000 Long Contracts For Difference (CFD) in CSR.

Particulars of Communication of Inside Information
(i) Between about 27 March 2006 and 21 November 2007 the defendant communicated to Oliver Curtis that the defendant was required to acquire or dispose of a large volume of shares on behalf of Orion Asset Management Limited in entities listed on the Australian Stock Exchange (ASX) which had the effect of raising or lowering respectively the price of shares in the entities on the ASX.
(ii) On or about 21 November 2007 the defendant sent a text message to Oliver Curtis to acquire 400,000 Long CFD's in CSR on that day.
And the said Director of Public Prosecutions further charges that

JOHN JOSEPH HARTMAN

23. Between about 27 March 2006 and 24 December 2007 at Sydney in the State of New South Wales, whilst in possession of inside information concerning the shares in Caltex Ltd (CTX) ("the financial products"), that was not generally available, being information which if it was generally available a reasonable person would expect to have a materia! effect on the price of the financial products, and being information which the defendant 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, and which financial products were able to be traded on a financial market operated in Australia, directly communicated the inside information to another, namely Oliver Curtis, knowing that Oliver Curtis would, or would be likely to acquire relevant Division 3 financial products, namely 79,131 Long Contracts For Difference (CFD) in CTX.

Particulars of Communication of Inside Information
(i) Between about 27 March 2006 and 24 December 2007 the defendant communicated to Oliver Curtis that the defendant was required to acquire or dispose of a large volume of shares on behalf of Orion Asset Management Limited in entities listed on the Australian Stock Exchange (ASX) which had the effect of raising or lowering respectively the price of shares in the entities on the ASX.
(ii) On or about 24 December 2007 the defendant sent a text message to Oliver Curtis to acquire 79,131 Long CFD's in CTX on that day.
And the said Director of Public Prosecutions further charges that

JOHN JOSEPH HARTMAN

24. Between about 27 March 2006 and 6 May 2008 at Sydney in the State of New South Wales, whilst in possession of inside information concerning the shares in Orica Ltd (ORI) ("the financial products"), that was not generally available, being information which if it was generally available a reasonable person would expect to have a material effect on the price of the financial products, and being information which the defendant 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, and which financial products were able to be traded on a financial market operated in Australia, directly communicated the inside information to another, namely Oliver Curtis, knowing that Oliver Curtis would, or would be likely to acquire relevant Division 3 financial products, namely 61,011 Long Contracts For Difference (CFD)in ORI.

Particulars of Communication of Inside Information
(i) Between about 27 March 2006 and 6 May 2008 the defendant communicated to Oliver Curtis that the defendant was required to acquire or dispose of a large volume of shares on behalf of Orion Asset Management Limited in entities listed on the Australian Stock Exchange (ASX) which had the effect of raising or lowering respectively the price of shares in the entities on the ASX.
(ii) On or about 6 May 2008 the defendant sent a text message to Oliver Curtis to acquire 61,011 Long CFD's in ORI on that day.
And the said Director of Public Prosecutions further charges that

JOHN JOSEPH HARTMAN

25. Between about 27 March 2006 and 11 June 2008 at Sydney in the State of New South Wales, whilst in possession of inside information concerning the shares in Boart Longyear Ltd (BLY) ("the financial products"), that was not generally available, being information which if it was generally available a reasonable person would expect to have a material effect on the price of the financial products, and being information which the defendant 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, and which financial products were able to be traded on a financial market operated in Australia, directly communicated the inside information to another, namely Oliver Curtis, knowing that Oliver Curtis would, or would be likely to acquire relevant Division 3 financial products, namely 2,600,000 Short Contracts For Difference (CFD) in BLY.

Particulars of Communication of Inside Information
(i) Between about 27 March 2006 and 11 June 2008 the defendant communicated to Oliver Curtis that the defendant was required to acquire or dispose of a large volume of shares on behalf of Orion Asset Management Limited in entities listed on the Australian Stock Exchange (ASX) which had the effect of raising or lowering respectively the price of shares in the entities on the ASX.
(ii) On or about 11 June 2008 the defendant sent a text message to Oliver Curtis to acquire 2,000,000 Short CFD's in BLY on that day.”

9 The prosecution and the offender have agreed the facts relevant to the offences and I adopt and will read the summary provided to me. It reads as follows:

“The offender commenced employment as an equities dealer at Orion Asset Management Limited, (‘Orion’), on 27 March 2006 at the age of 20. As an equities dealer, the offender was employed to buy and sell listed securities on the Australian Securities Exchange in accordance with instructions provided to him by Orion’s stock portfolio managers. The stocks were bought and sold by Orion as fund manager on behalf of its clients. Orion offered a number of different investment options to its clients and each of Orion’s investment options comprised of a variety of stocks.

The level of stock held by Orion in any particular security was the ongoing responsibility of Orion’s portfolio managers. This involved setting targets for the acquisition or disposal of specific stocks in order for Orion to maintain the best possible stock portfolio on behalf of its clients. The desired level of acquisition or disposal of particular stocks was known as ‘target portfolio weights’.

The offender’s role at Orion involved the buying and selling of shares to align the target and actual weights of shares held on behalf of Orion’s clients. The target portfolio weights for each of Orion’s investment options were recorded by Orion’s portfolio managers in an electronic spreadsheet which was linked to Orion’s dealing system. From the Orion dealing system, the offender was able to see the difference between the target quantity (based upon the target portfolio weights) and the actual quantity of shares held on behalf of Orion’s clients.

The offender accessed Orion’s dealing system throughout his working day to carry out his role as an equities dealer. From time to time, the offender was also provided with verbal instructions from Orion’s portfolio managers with regard to the manner in which particular shares should be bought or sold. In the course of the offender enabling Orion to achieve the required targets, the offender was able to observe and generally effect:

(a) the time at which shares were bought or sold,
(b) the price at which shares were bought or sold,
(c) the quantity of shares bought or sold and
(d) the stockbrokers used to buy or sell shares.

This is because the Orion dealing system enabled the offender to monitor the general level of trading in particular shares and to view the execution of orders he had previously placed with brokers.

Often the portfolio targets involved the buying or selling of significant volumes of a particular stock. In the course of buying or selling in significant volumes, the offender came to appreciate that large volume trading could have the effect of raising or lowering the price of a stock within a short timeframe.

About 16 August 2006, the offender opened an IG Markets Limited (‘IG Markets’) trading account, numbered H8988. IG Markets Limited is part of the IG Group based in the United Kingdom. IG Markets’ clients include brokers, fund managers and private investors such as the offender. IG Markets provides the opportunity for clients to trade in a number of derivatives as well as options, indices and foreign exchange.

The offences now before the court relate to conduct by the offender in which he used financial products offered by IG Markets in the form of Contracts for Difference, (CFD). A CFD is a derivative, the value of which is determined by the price of an underlying share.
CFDs on individual shares are different to buying or selling the underlying shares in that

(a) the CFD trader only has to pay a margin, usually about 10% of the total contract value, rather than having to pay the total transaction amount as would be required if the underlying shares were bought;

(b) unlike the shares, when a CFD is sold, (short-selling), there is no need for a CFD trader to later acquire the underlying shares for transfer at settlement; and
(c) interest is calculated daily on a CFD trader’s overnight positions.
Once a CFD position is opened, it can generally be held open for as long as the CFD trader wishes.
Buying or selling a CFD on an individual share is economically similar to buying or selling the underlying share on the stock market in that :
(a) the perceived price at which the CFD is bought or sold is the same as the price the underlying share can be bought or sold for on the stock market;
(b) the CFD trader,
(i) where a CFD is bought - receives the benefit of all rises and bears the cost of all falls in the price of the underlying share;
(ii) where a CFD is sold – receives the benefit of all falls and bears the cost of all rises in the price of the underlying share;
(c) commission or brokerage is paid on the trading; and

(d) the CFD traders’ account is credited with an amount equivalent to any cash dividend paid on the underlying shares.

This means that the potential profits gained or losses incurred in CFD trading is much greater than trading in the underlying shares. This is because a trader only puts down approximately 10% of the total value of the number of CFDs acquired, but takes the benefit or the loss on 100% of the CFDs. For example,
The shares in company A are trading at $15 each.
A CFD trader takes out a buy CFD contract for 1,000 company A shares.

The 1,000 Company A shares are worth $15,000, however, the CFD trader is only required to place with the CFD market 10% of the value of the underlying shares, being $1,500.

The shares in Company A rise to $20.00, at which point the CFD holder ‘closes out’ by disposing of the 1,000 shares.
The overall profit or loss on a CFD trade is determined by:

(a) multiplying the number of shares in the CFD position by the difference between the opening and closing price of the CFD;
(b) deducting the commission and interest payable to the CFD provider; and
(c) adding any amounts credited as notional dividends.

In the example given above, the CFD trader receives back $5 on each of the 1,000 CFDs originally acquired, being $5,000 less commission, interest and notional dividends.
A ‘buy’ (‘acquired’ or ‘long’) CFD on an individual share is purchased where a person expects the share price to rise. Accordingly, the offender traded in buy CFDs in connection with a particular share at a time when he was directed by Orion’s ‘target portfolio weights’ to purchase the shares relating to the CFD derivative.

A ‘sell’ (‘disposed’ or ‘short’) CFD on an individual share is bought when a person expects the share price to fall. Accordingly, the offender traded in sell CFDs in connection with a particular share at a time when he was directed by Orion’s ‘target portfolio weights’ to sell the actual shares relating to the CFD derivative.

The offender, while possessing the information concerning the proposed trading intentions of Orion in the shares of a particular entity would open, would open (Buy or Sell) CFD contracts in the shares of that entity on his personal IG Markets account.
The offender would then carry out the Orion trading strategy by placing orders to buy or sell the related shares. The offender not only knew the approximate quantity and direction, (sell or buy) of the shares to be traded, but he also knew how much of the order was completed or outstanding at any point in time.
Once the buying or selling in a particular share on behalf of Orion was approaching completion the offender would then ‘close out’ his CFD position with IG Markets by placing an opposing trade on the personal account.
CFD positions are closed by the CFD trader by:
(a) selling (or disposing) CFDs where the CFD trader bought (or acquired) CFDs as an opening position; and

(b) buying (or acquiring) CFDs where the CFD trader sold (or disposed) CFDs as an opening position.

On 21 November 2007, the offender signed the Orion Personal Transactions Policy confirming that he had “read, understood and will comply with all the guidelines of this policy”. The policy stated at:

(a) Page 4. ‘Insider trading is improper trading in securities on the basis of price sensitive information that is not generally available to the public. Price sensitive information includes the intentions or decisions of Orion’s Investment Team regarding individual securities”.

(b) Page 5. “Employees are not to communicate Inside Information to people external to Orion, unless such communication is necessary for the exercise of employment duties”; and

(c) Page 5 “Employees are not to buy and/or sell securities that are currently being traded by Orion.”

On 1 July 2008, the offender was audited as an employee of Orion by Risk and Compliance Services in relation to his personal trading. In response to whether he had conducted any trading for the period 1 January 2008 to 30 June 2008 he responded by email, “no trading”.

On 12 January 2009 the offender was audited again by Risk and Compliance Services. In response to whether he had conducted any trading for the period 1 July 2008 to 31 December 2008, he responded again via email, “no trading”.

On 20 January 2009 the offender’s employment was terminated by Orion after the offender’s solicitor had met with Orion (in relation to matters now before the court) and offered the offender’s resignation.

The information possessed by the offender as a result of his employment concerning the proposed trading intentions of Orion was not generally available and the offender knew the information was not generally available.
The information was not readily observable and did not consist of deductions, conclusions or inferences made or drawn from information that was readily observable.
The information had not been made known in a manner that would, or would be likely to bring it to the attention of persons who commonly invested in securities, of a kind whose price might be affected by the information, (and it did not consist of deductions, conclusions or inferences made or drawn from information so made known).
If the information was generally available a reasonable person would expect it to have a material effect on the price or value of the shares and their derivatives including the CFDs as traded by the offender.
The offender knew that if the information were generally available it would be expected to have a material effect on the price or value of the shares and their derivatives including CFDs.”

10 On Tuesday 20 January 2009 the offender, through his lawyer, contacted ASIC wishing to fully cooperate in relation to the matters now before the Court. The offender initially requested an interview with ASIC prior to any notification of an investigation.

11 On Wednesday 21 January 2009, the offender voluntarily attended the Australian Securities and Investment Commission and indicated that he wished to fully cooperate and assist ASIC with any of its inquiries in relation to his conduct while at Orion. The offender has continued to assist ASIC from this time.

12 The offender voluntarily participated in a record of interview. During the interview the offender made a number of admissions as to his conduct concerning the matters now before the Court.

13 The offender admitted that he had signed a personal trading policy document which referred to insider trading. When he was asked what his understanding of insider trading was, he replied “It could be news about a company or it could be news about a large amount of stock that needs to be bought or sold”.

14 When asked about his conduct at Orion and connection with his IG Markets account, the offender made admissions to placing orders through his IG Markets account and then trading on behalf of Orion. The offender at one point said:

“(a) For example I could buy a stock, Orion could then buy a stock and then I could sell the stock that I had bought previously … and
(b) If I saw that Orion needed to trade in a stock and that may have material impact on the price of the stock, then I would trade for myself personally and then trade out of the position when I thought it was appropriate for my personal best interests”.

15 The offender admitted that he used the computer at Orion to place orders in his personal IG Markets account via the internet. The offender also said “For my trading, for my trading in Australian CFD shares I only used the computer at Orion because I only – I wouldn’t want to trade in a stock unless I knew – unless I was at work, to be able to have knowledge of Orion’s trades”.

16 The offender possessed information relating to his role as an equities dealer at Orion. The information was that Orion intended to purchase or sell a large number of particular shares on the Australian Securities Exchange and that the offender would control the conduct and monitor that order (“the inside information”).

17 The offender while possessing inside information concerning the proposed trading intentions of Orion in a particular security, would open CFD contracts in that security on his personal account. The value of the opening CFD reflecting the underlying share price of the security prior to Orion trading in the security.

18 The offender would then carry out the Orion trading strategy by placing orders to buy or sell the security. The offender not only knew the quantity and direction, (sell or buy) of the shares to be traded, but he knew how much of the order was completed or outstanding at any point in time.

19 The offender would then “close out” his CFD position by placing opposing trade on his personal account. The offender sought but did not always dispose of the CFDs towards the end of Orion’s trading activity. Insofar as he was able to do so, this had the effect of maximising his profit and providing him with a known price at a given time.

20 When the offender participated in the interview on 21 January 2009 he was also questioned about the communication of inside information to Mr Oliver Peter Curtis.

21 During the interview the offender made admissions to passing inside information obtained during the course of his employment at Orion to Mr Curtis. The offender communicated this inside information for the purpose of Mr Curtis using the information to acquire and there after dispose of Division 3 financial products, namely CFDs.

22 Mr Curtis is a childhood friend of the offender, the offender and Mr Curtis have known each other since about 1998. The offender communicated the inside information to Mr Curtis during the period 23 May 2007 and June 2008. During this time the offender considered that he and Mr Curtis were best friends and were also working in the same industry.

23 Some time after the offender commenced working at Orion he talked to Mr Curtis in general terms about what the offender did at Orion including that he traded in large volumes of stock on behalf of Orion and how that trading moved the market price of the stock.

24 Over time, the offender and Mr Curtis discussed the idea of Mr Curtis trading in CFDs using inside information possessed by the offender about Orion’s intended trading in the shares of entities listed on the Australian Securities Exchange.

25 In his role as a securities dealer for Orion the offender would receive instructions to trade in certain equities. These instructions would include what securities to trade in, whether to acquire or dispose of the securities and at what volume. Once in possession of this inside information the offender would send a message via the mobile phone to Mr Curtis about what security to take out a CFD position in, whether to go long or short and how many CFDs to acquire.

26 During the interview, the offender disclosed that he and Mr Curtis communicated with each other about Mr Curtis’s trading in CFDs by using Blackberry mobile phones, both of which had been purchased by Mr Curtis. The offender later provided his Blackberry to ASIC. The purpose of communicating using the Blackberry was so the offender and Mr Curtis could use a method of transmitting messages that did not leave data on telecommunication services.

27 When asked about the use of the Blackberry phone in this way the offender explained:

“I was told that there had been a case in the - this sort of activity that it is common - a lot of people in the market would say is quite common. He had been - he wanted to be careful that there was never SMSs or phone calls from one another so that if he was to get asked “how were you trading so successfully?” he could say “I’m a good trader” and not that “I’m getting information from someone”.

28 After the first text message from the offender, Mr Curtis would normally respond with a message to the effect that he had traded in CFDs, had partially traded in CFDs or was unable to trade. In this regard Mr Curtis would send messages like “can’t do it”, “done” or “unfinished”.

29 Mr Curtis would send this message so that the offender would know when to start trading on behalf of Orion in the shares in which Mr Curtis had taken out a CFD position. By this communication Mr Curtis would confirm with the offender that he had taken out, for example, a long CFD position in a certain entity, before the offender started acquiring shares in that entity, knowing that the acquisition would raise the price of the shares in the entity.

30 During the period in which the offender was conducting the share trading on behalf of Orion, the offender and Mr Curtis would sometimes send messages to each other like, “wow the price is going up”. Once the offender was sure that his trading on behalf of Orion was nearing completion he would send Mr Curtis another message in words to the effect of “sell X”, “get out of X”, X being the entity in which Mr Curtis was presently holding CFDs. On a few occasions when the offender knew that Orion would continue to trade in the shares of an entity into the next day he would message Mr Curtis words to the effect, “we are holding tonight”.

31 The offender and Mr Curtis agreed to this system of messaging by Blackberry in order to coordinate the taking up of a CFD position by Mr Curtis before the offender commenced trading in the shares in the same entity. This was done in order to maximise the likelihood that the share price would move in the same direction as the CFD taken out by Mr Curtis.

32 At the time of communicating the inside information to Mr Curtis, the offender knew or ought reasonably to have known, that Mr Curtis would apply for, acquire or dispose of CFDs using the information provided by the offender to Mr Curtis.

33 The offender was asked during the interview if Mr Curtis knew the information was from Orion and the offender said “yes”. The offender was asked if Mr Curtis knew the information was confidential and again the offender said “yes”.

34 The offender has no prior convictions.

35 He has informed the Australian Securities that he has a past history of severe gambling addictions and both prior to and during the commission of the offences, lost substantial sums of money as a consequence of his gambling at the Sydney Casino and with bookmakers. During the period over which the offences were committed he sustained substantial losses in lawful trades on the ASXIndex. The offences were committed between June 2007 and January 2009.

36 The offender is now aged twenty-five. He was educated at St Ignatius College and studied economics at Sydney University. During the course of his degree he was approached by Orion and gained employment as an equities dealer. As I have explained, in that role he was required to trade on behalf of his employer, placing buy and sell orders as required by senior members of the firm. The offender’s discretion was confined to choosing which broker to place the order with and the timing of the placement of that order. Although a responsible job, his task was the equivalent of a purchasing officer in many other areas of employment.

37 Evidence was tendered from psychiatrists which indicated that the offender is likely to have suffered from depression since he was in Year 12 at high school. That depression may have been triggered by the onset of a serious bipolar illness in his brother. His father, who gave evidence, indicated that from about that time his son became withdrawn, ceased to participate in the range of school activities which he had previously engaged in, and commenced a pattern of behaviour of which his father did not entirely approve. While studying full-time he obtained employment as a bookmaker’s penciller and began to gamble on his own account. It is apparent that he now has a serious gambling problem. It would seem that the “thrill” of his illegal trades was similar to the thrill he received from a gamble on a horse or a play at the casino. His need for a “thrill” may be related to his psychiatric problems to which I have referred again below. In part his behaviour may be explained by those problems but it cannot be excused.

38 The offender gave evidence before me. He regrets his offending and the hurt he has occasioned to his family and others. He has undergone counselling for his addiction but it is apparent that it has not been successful and he has recently returned to gambling. He has done so in circumstances where his father has provided him with access to a credit card. He has gambled into debts in the order of $70,000 without the authority of his father and without his father being aware of his activities. This, like the offences which he has committed, is a breach of trust - on this occasion the trust of his father.

39 Upon the offences being detected the offender made a full confession and provided ASIC with the information in relation to the tipping offences which ASIC accepts would never have been available to be discovered. Accordingly, for those offences the Crown accepts that the offender is entitled to a discount of the type discussed in the R v Ellis (1986) 6 NSWLR 603. I determine the appropriate discount to be 10 per cent.

40 Following detection of his offending, the offender suffered a major depressive episode which required his hospitalisation. He had suicidal ideation. His medical condition was retrieved by anti-depressant medication which he continues to receive. Evidence was given by the tender of reports from the treating psychiatrist Dr Wilson and the consultant Dr Phillips. I have considered those reports carefully.

41 It is apparent that the offender will continue to require treatment for his depression although whether his condition will improve once the trauma of the discovery of his crimes and the sentencing process have passed is unknown.

42 It would seen that he has suffered a return of adverse symptoms in recent weeks as the sentencing hearing approached. That is not surprising. But the evidence does not persuade me, that given the nature of the offences, the offender should not receive a term of imprisonment. His counsel accepts that position. However, I will reflect his psychiatric difficulties by fixing sentences which I believe to be the minimum appropriate in all of the circumstances.

43 The Crown accepts that the offender is entitled to the maximum discount of 25% for his plea of guilty which demonstrates a willingness to facilitate the course of justice. He entered his pleas at the first available opportunity. The offender has also indicated that he is prepared to give evidence against another person being the person to whom he gave information. He is entitled to a further discount in that regard. That discount, which I determined to be 10%, is of course dependent upon the evidence being given in other proceedings. I shall provide that discount for the sentence for the tipping offences to which his offer to give evidence relates.

44 The offender engaged continuously in serious criminal conduct over a period of about nineteen months. His offences were serious. His conduct was both in breach of the law and contrary to his obligations to his employer. He was aware of those obligations which had been communicated to him in writing. Furthermore, he had responded to questions from his employer asking whether he was trading on his own account by lying and falsely stating that he was not trading.

45 It must be remembered that his crimes were not victimless. Each illegal transaction was likely to have a cost to someone, who either traded or held their position, without the benefit of the knowledge available to the offender. The offender set about systematically trading in breach of the law for the sole purpose of enhancing his personal wealth at the expense of others. The evidence which I accept indicates that the insider trading charges alone made him a total profit in excess of $1.9 million.

46 The Courts have said on many occasions that general deterrence is of particular significance in relation to white collar crime. This is particularly the case in relation to insider trading offences which by their nature are easy to perpetrate but difficult to identify. Whereas in the present case the course of offending conduct results in the commission of multiple offences, a sentence of imprisonment is inevitable. I appreciate that the trades which the offender was making were not made in conventional markets but I do not accept that as a consequence the need for general deterrence is diminished.

47 Although the offender has suffered from psychiatric difficulties the need for a sentence which reflects general deterrence is such that his psychiatric illness is of only limited significance in the present case. There can be no doubt that notwithstanding any illness he may have been suffering from he knew that what he was doing was wrong and a breach of the law.

48 But for his recent lapses and dishonest conduct in relation to his father, I may have concluded that the offender had good prospects of rehabilitation. However, although it is unlikely that he would ever again secure employment in a position where he was able to trade with inside information in the financial markets, his recent behaviour does not lead me to have confidence that he will be able to live a life without dishonest dealings with others to his own advantage. Unless he comes to terms with and ceases gambling the temptations to dishonest conduct may prove again irresistible.

49 I accept that in part the offender’s conduct was affected by his immaturity. When his father gave evidence he described a world in which his son was employed as “plastic.” This seems to me to be an appropriate description. The offender was paid a total of $350,000 in salary and bonuses in his last year in employment for carrying out work which could be appropriately described as a responsible clerical position. It is plain from the offender’s evidence that the world into which he entered while still at the university corrupted his values, and given his predisposition to gamble, resulted in the offender pursuing the “high life” without regard for whether or not he was committing criminal offences.

50 Overseas holidays and gambling trips to Las Vegas and other casinos, together with an expensive luxury motor vehicle, became part of his life. In recent years the world of financial markets has come under increasing scrutiny and criticism. Paying $350,000 to a recent graduate in his early twenties carrying out a task of modest responsibility underlines the extent to which the values which underpin our society can be compromised. The values of productive endeavour and integrity in dealings and business can easily be lost. This is what happened in the case of the offender.

51 As it happened, the offender, a person of immature years, was allowed access to market information without effective supervision in a world where the remuneration paid to him bore no relationship to the remuneration paid to young employees outside the financial markets. The offender’s employer, and others in the financial markets industry, have a responsibility to ensure that investors can rely on the integrity of the dealers in the market. I do not know how this can best be achieved, however, appropriate controls and audit requirements with personal supervision must be put in place and maintained. The temptations are so great and the potential rewards so significant that the fall into criminality of individuals is a significant risk.

52 The offender has not previously come to the notice of the authorities and he is entitled to the benefit of his good character. However, as has previously been said, those that commit white collar crime often have blameless records. Since his detection the offender has not worked and has returned to life at home with his partners. Encouraged by his family he has involved himself in significant work within a Catholic charitable organisation. He is to be commended for the efforts which he has made and which may have, but for his recent abuse of his father’s trust, have suggested that he has good prospects of rehabilitation. He has paid $1.59 million pursuant to orders made by consent under the Proceeds of Crime Act 2002 (Cth). However s 320(b) of the Act indicate that this fact is not relevant to the sentence. I am in no doubt that his illegal gains would have been greater than this amount and they could have been greater by a significant margin.

53 As I have indicated, the offender’s father gave evidence. He is a professional man. It is obvious that both he and his wife are immensely distressed by their son’s behaviour. That is plainly understandable. They have six children, one of whom, as I have indicated, suffers from a serious bipolar disorder. I appreciate the tragedy which the offender’s behaviour has brought to the family. The parents, and indeed the offender’s siblings, have indicated their willingness to continue to support him and I have no doubt that this will occur.

54 I have decided that the offender must serve a period of full-time custody but I am sure that on his release he will receive whatever support the family are able to give him. However, whatever family support the offender may have now and in the future, unless he faces up to and deals with the issues in his life which have brought him to this point, he may never take his place as a responsible member of the community. Anyone who is the parent of children could not but appreciate the tragedy the offender’s behaviour represents to the family. Only he can make amends once he is released from custody.

55 Father Sinn gave evidence of the offender’s involvement in charity work. Father Sinn has been greatly impressed by the offender and believes that the events which have occurred have the potential to make the offender a far more worthwhile member of the community. I have no doubt that all those related to and friendly with the offender trust that Father Sinn’s assessment of the situation will become the reality. Other persons provided testimonials which confirmed the commitment which the offender has made to charity work since his offending was discovered.

56 Both the Crown and the offender’s counsel accept that for the purposes of sentencing the insider trading offences should be grouped and one sentence imposed. It is accepted that a separate sentence should be imposed for the tipping offences. Given the number of individual offences, and the lengthy period of offending, this is a significant concession by the Crown. The parties accept that the s 16BA schedule offences in relation to the insider trading offences should be considered in relation to count 1 and for the tipping offences in relation to count 20 I propose to take this course although I will provide some concurrency of the sentences it will be limited.

57 The sentences I propose compared with the extensive criminality of the offender may, to some people, seem to be lenient. This is in large part due to the Crown’s concession that I should consider the offences as two sets of offences reflecting the two statutory provisions which were breached and assume a total maximum penalty of ten years imprisonment, being five years for each set.

58 Furthermore, although the offender must be adequately punished and others deterred, I am mindful of his relative youth, psychiatric illness and the possibility, notwithstanding my reservations, of his future rehabilitation.

59 In all the circumstances I have decided that the sentence which I impose for the insider trading offences should be discounted by a total of 25%, the discount for the tipping offences will be 45%. The latter includes a discount of 10% conditional upon the offender giving evidence in the contemplated proceedings against the alleged co-offender and also includes the Ellis discount.

60 Mr Hartman, would you please stand.

John Joseph Hartman, you are convicted of each of the offences in the indictment.

A. In relation to count 1, having regard to the matters on the schedule 1 annexed to these remarks, I sentence you to a term of imprisonment of three years commencing on 2 December 2010 and expiring on 1 December 2013.

B In relation to counts 2 to 19 I sentence you to a term of two years imprisonment, each term to commence on 2 December 2010 and expire on 1 December 2012.

C. In relation to count 20, having regard to the schedule offences in respect of that count, I sentence you to a term of two years imprisonment to commence on 2 June 2013 and expiring on 1 June 2015.

D. In relation to counts 21 to 25 I sentence you to a term of eighteen months imprisonment to commence on 2 June 2013 and expire on 1 December 2014.

The consequence is that the overall term of your sentence will be 4½ years.

I fix a non-parole period of three years commencing on 2 December 2010 and expiring on 1 December 2013 on which day you will be eligible for release to parole.

61 I have considered whether to make a cognisance release order. I have ultimately decided not to do so. I make the assumption and if this is not to occur in the ordinary course I recommend that you receive treatment for your gambling problem when in custody. I recommend that the Parole Authority give consideration to the continuation of that treatment being required as a condition upon your release to parole.

GAME: Your Honour, could I just raise one matter. Enquiries have been made in respect of custody by those who instruct Mr Staehli. Could your Honour make a recommendation that Mr Hartman be classified to something called special management area protection. I understand that making that recommendation is likely to assist in his immediate and appropriate placement.

HIS HONOUR: Special management area protection. Can I just understand what that means?

GAME: Mr Staehli might be able to tell you.

HIS HONOUR: What would that mean?

STAEHLI: Would your Honour excuse me for just a moment. I understand what that term means is that if applied to Mr Hartman it would mean that there would be restrictions on access, that is joint access if I can put it that way, between him and certain other prisoners so that if classified in that way on the basis of a risk assessment made by the Corrective Services authorities he would not be in a general gaol population.

HIS HONOUR: This is the risk because of the prospect of evidence?

STAEHLI: Yes, that’s the point of it, your Honour.

HIS HONOUR: I am certainly prepared to make that recommendation. What are the terms of the recommendation I should make?

STAEHLI: I would suggest the prison authorities might I say are aware of the potential for Mr Hartman to be examined by them in relation to risk assessment, so might I suggest that your Honour recommend either that he be placed in special management area protection or that the prison authorities immediately examine whether or not he should be placed in such protection.

HIS HONOUR: I think I am prepared to say this. Mr Game, tell me if this would be appropriate. I am prepared to say that having regard to the matters which I have addressed in my remarks I recommend to the prison authorities that the offender be placed in the special management area protection within the prison system.

GAME: Thank you, your Honour.

HIS HONOUR: Is there anything else gentlemen. Mr Crown, anything else?

STAEHLI: Just excuse me, your Honour. No, thank you.

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