R v Heath - [2015] NSWDC 282

District Court

New South Wales

Medium Neutral Citation: R v Heath [2015] NSWDC 282
Hearing dates: 27 August 2015
Decision date: 25 September 2015
Jurisdiction: Criminal
Before: King DCJ
Decision:
Count 2 (Matched Trades Offence):
Sentenced to a term of imprisonment of 18 months commencing 25 September 2015 and expiring on 24 March 2017
Count 1 (Market Manipulation Offence)
Sentenced to a term of imprisonment of two years to commence three months on 25 December 2015, and to expire on 24 December 2017.
After serving 9 months, to be released on a recognisance release order in the sum of $10,000 without surety, to be of good behaviour for a period of 18 months
Catchwords: Commonwealth sentence – Share Trading – CFD Trading - Market Manipulation - s 1041A(c) – Matched Trades – create false and misleading appearance with respect to the price for trading in a financial product - s 1041B(1)(b)
Legislation Cited: Corporations Act 2001 (Cth)
Australian Securities and Investments Commission Act 2001 (Cth)
Crimes Act 1914 (Cth)
Securities Industry Act 1970 (NSW)
Cases Cited: North v Marra Developments Ltd (1981) 148 CLR 42
R v JM (2013) 87 ALJR 836
Khoo v R [2013] NSWCCA 323
Category: Sentence
Parties: Regina (Crown)
Nigel Derek Heath (Offender)
Representation:
Counsel:
Mr M Thangaraj SC (Offender)
Ms L Gallagher (Crown Cth)
Solicitors:
Watson Mangioni (Offender)

File Number(s): 2014/00274829

SENTENCE

HIS HONOUR: Nigel Heath appears for sentence in respect of two offences contrary to the Corporations Act 2001. The first offence is referred to in short as “market manipulation”. It is that between 16 February 2012 and 19 August 2013, at Sydney, he took part in or carried out 138 transactions involving financial products relating to Petsec Energy Limited that had the effect of creating an artificial price for trading in Petsec Energy Limited shares on the financial market operated in this jurisdiction, namely, the Australian Securities Exchange. Such an offence is contrary to s 1041A(c), and s 1311(1) of the Corporations Act 2001 (Cth) applies.
The second offence in short is creating a false and misleading appearance with respect to the price for trading in a financial product. It is that he between 2 July 2012 and 11 October 2013 at Sydney did acts, namely, carried out 30 transactions involving financial products relating to Petsec Energy Ltd, Leyshon Resources Ltd, Malagasy Minerals Ltd and Orca Energy Ltd that had the effect of creating or causing the creation of a false or misleading appearance with respect to the price of trading in Petsec Energy shares, Leyshon Resources shares, Malagasy Minerals shares and Orca Energy shares on the financial market operated in this jurisdiction, namely, the Australian Securities Exchange. Such an offence is contrary to s 1041B(1)(b) and s 1311(1) of the Corporations Act 2001 (Cth) applies.
In respect of each of the two offences, the maximum penalty provided is ten years imprisonment and/or a fine, the greater of $495,000 or 4,500 penalty unit, or three times the value of the benefits attributable to…

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 Heath

Details

AGLC: R v Heath [2015] NSWDC 282
Case: [2015] NSWDC 282
Decision Date: 25 September 2015

CaseChat Overview and Summary

In the Federal Court of Australia, the Commonwealth prosecuted Heath for offences under the Corporations Act 2001. Heath was charged with two counts: count 1 for manipulating the market, and count 2 for matched trades. The case revolved around Heath's alleged conduct in the share trading market, specifically involving contracts for difference (CFDs), and whether his actions breached the criminal provisions of the Act.

The central legal issues addressed by the court were whether Heath's actions constituted market manipulation under section 1041A(c) of the Corporations Act, and whether his use of matched trades created a false and misleading appearance regarding the price for trading in financial products under section 1041B(1)(b). The court had to determine the nature and extent of Heath's involvement in the transactions, and whether his conduct was deliberate and intended to deceive market participants.

The court found that Heath's actions did indeed constitute market manipulation and the use of matched trades to create a false market appearance. It concluded that Heath's conduct was not merely incidental or accidental but was deliberate and intended to deceive. The court emphasised the importance of maintaining market integrity and the need for penalties to deter such conduct. As a result, Heath was sentenced to a term of imprisonment for each count, with the sentences to run concurrently.

Orders

Orders of the court

Count 2 (Matched Trades Offence):

Sentenced to a term of imprisonment of 18 months commencing 25 September 2015 and expiring on 24 March 2017

Count 1 (Market Manipulation Offence)

Sentenced to a term of imprisonment of two years to commence three months on 25 December 2015, and to expire on 24 December 2017.

After serving 9 months, to be released on a recognisance release order in the sum of $10,000 without surety, to be of good behaviour for a period of 18 months

Background

Background to the litigation

Full text does not contain this section.

Evidence

Evidence Before The Court

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Decision

Reasons for decision

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Ratio Decidendi

Legal Principle Established

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Medium Neutral Citation:	R v Heath [2015] NSWDC 282
Hearing dates:	27 August 2015
Decision date:	25 September 2015
Jurisdiction:	Criminal
Before:	King DCJ
Decision:	Count 2 (Matched Trades Offence): Sentenced to a term of imprisonment of 18 months commencing 25 September 2015 and expiring on 24 March 2017 Count 1 (Market Manipulation Offence) Sentenced to a term of imprisonment of two years to commence three months on 25 December 2015, and to expire on 24 December 2017. After serving 9 months, to be released on a recognisance release order in the sum of $10,000 without surety, to be of good behaviour for a period of 18 months
Catchwords:	Commonwealth sentence – Share Trading – CFD Trading - Market Manipulation - s 1041A(c) – Matched Trades – create false and misleading appearance with respect to the price for trading in a financial product - s 1041B(1)(b)
Legislation Cited:	Corporations Act 2001 (Cth) Australian Securities and Investments Commission Act 2001 (Cth) Crimes Act 1914 (Cth) Securities Industry Act 1970 (NSW)
Cases Cited:	North v Marra Developments Ltd (1981) 148 CLR 42 R v JM (2013) 87 ALJR 836 Khoo v R [2013] NSWCCA 323
Category:	Sentence
Parties:	Regina (Crown) Nigel Derek Heath (Offender)
Representation:	Counsel: Mr M Thangaraj SC (Offender) Ms L Gallagher (Crown Cth) Solicitors: Watson Mangioni (Offender)
File Number(s):	2014/00274829