R v Wong - [2020] NSWDC 382

District Court

New South Wales

Medium Neutral Citation: R v Wong [2020] NSWDC 382
Hearing dates: 15 May 2020
Date of orders: 04 June 2020
Decision date: 04 June 2020
Jurisdiction: Criminal
Before: Bennett SC DCJ
Decision:
Term of imprisonment of 1 year 6 months but, pursuant to s 20(1)(b) Crimes Act 1914, order his immediate release conditionally upon entering a recognizance in himself of an amount of $10,000, to be of good behaviour for 3 years

Catchwords:
SENTENCING — Federal offenders — Relevant considerations — Sentence by State court for offence against Commonwealth law — Insider trading
SENTENCING — Mitigating factors — No record of previous convictions — Plea of guilty — Remorse — Unlikely to re-offend
SENTENCING — Penalties — Recognizance
SENTENCING — Relevant factors on sentence — Maximum penalty — Objective seriousness
SENTENCING — Sentencing procedure — Agreed facts
SENTENCING — Subjective considerations on sentence — Age of offender

Legislation Cited:
Corporations Act2001(Cth)
Crime Act 2002 (Cth)
Crimes Act1914 (Cth)
Criminal Code Act 1995 (Cth)

Cases Cited:
RvDoff [2005] NSWCCA 119
R v Olbrich (1999) 119 CLR 270
RvPogson, Lapham and Martin [2012] NSWCCA 225
R v Qutami [2001] NSWCCA 353
R v Rivkin [2003] 198 ALR 400

Category: Sentence
Parties: Regina (Crown)
Gilman Edwin Wong (Offender)
Representation:
Simon Buchen SC (Senior counsel for the Commonwealth Crown)
Rose Khalilizadeh (Junior counsel for the Commonwealth Crown)

Tim Game SC (Senior counsel for the Offender)
Julia Roy (Junior counsel for the Offender)
Commonwealth Director of Public Prosecutions (Crown)
Dentons (Offender)

File Number(s): 2018/260942

REVISED JUDGEMENT

Introduction

These are the sentence proceedings of Gilman Edwin Wong.
Mr Wong was before me on 15 May 2020, where he pleaded guilty upon arraignment for an offence that was expressed in the following terms:

“For that he on or about 26 October 2016 at Sydney in the State of New South Wales did dispose of relevant Division 3 financial products, being 74,968 shares in Sirtex Medical Limited whilst in possession of inside information concerning Sirtex, being information:

that was not generally available but which, if it had been generally available, a reasonable person would have expected it to have a material effect upon the price or value of the financial products; and,

which he ought reasonably to have known was not generally available and which, if it had been generally available, a reasonable person would have expected it to have a material effect on the price or value of the financial products.”

The Penalty

The offence charged in those terms is contrary to s 1043A(1) and 1311(1) Corporations Act 2001 (Cth). The maximum penalty provided for this offence at the time, was imprisonment for ten years and a fine represented by 4,500 penalty units or $810,000, or, three times the total value of the benefit obtained whichever is the greater.
Since the commission of this offence, the penalty has been increased by Parliament. [1] Indeed the penalty at the time of the offence had been increased by parliament from a maximum penalty of five years. Those decisions by the legislature reflect of the seriousness with which it views such misconduct.
1. Corporations Act 2001 (Cth) Schedule 3 – increased to imprisonment for 15 years

Pre-sentence Custody

I note that the offender has spent no time in custody for this offence.

The Plea of Guilty

Although he pleaded guilty upon arraignment, it is conceded by the Crown that the plea of guilty provided considerable utility, and in accordance with recent authority dealing with Commonwealth prosecutions, a discount calculated at 25% is appropriate in this case. This is because his acknowledgment of guilt was indicated early on in the process, and as I understand it, there was a plea of guilty either entered or indicated in the Local Court proceedings before committal to this Court but for some reason, perhaps technical, there was a need for there to be an arraignment upon an indictment.
The following analysis supports the concession given by the Crown.
The legislation creating the offence, I have accessed for the preparation of this judgement. I note first of all, the definition of inside information, and information, that are provided in s 1042A Corporations Act 2001. Information includes:

“matters of supposition and other matters that are insufficiently definite to warrant being made known to the public; and,

matters relating to the intentions, or likely intentions, of a person.”

Inside information means:

“information in relation to which the following paragraphs are satisfied:

the information is not generally available;

if the information were generally available, a reasonable person would expect it to have a material effect on the price or value of particular Division 3 financial products.”

There is a definition given to the term, “material effect”, which appears in s 1042D. It provides:

“For the purposes of this Division, a reasonable person would be taken to expect information to have a material effect on the price or value of particular Division 3 financial products if (and only if) the information would, or be likely to, influence persons who commonly acquire Division 3 financial products in deciding whether or not to acquire or dispose of the first-mentioned financial products.”

There is no issue upon the nature of the financial products that were transacted at the direction of the appellant; they were shares in the company. It is not suggested that he did not have inside information. It is not suggested that the information would not be expected to have a material effect on the price or value of those shares.
The sentence proceedings were contested upon the fault element that attaches to this offence.
The offence is expressed in terms consistent with the charge as it was set forth in the indictment. Section 1043A provides:

“Subject to this Subdivision, if:

a person (the insider), possesses inside information; and

the insider knows, or ought reasonably to know, that the matters specified in paragraphs (a) and (b) of the definition of inside information in section 1042A are satisfied in relation to the information;

the insider must not (whether as principal or agent):

apply for, acquire, or dispose of, relevant Division 3 financial products, or enter into an agreement to apply for, acquire, or dispose of, relevant Division 3 financial products; or,
procure another person to apply for, acquire, or dispose of, relevant Division 3 financial products, or enter into an agreement to apply for, acquire, or dispose of, relevant Division 3 financial products.”

The statement of agreed facts in the second paragraph includes the following:

“The offender is to be sentenced on the basis that he ought reasonably to have known that the actual dosage sales information was inside information. It is not alleged that the offender, at the relevant time, knew that this was in fact the case.”

The emboldened portion of that passage is my emphasis.
The elements of the offence are addressed in s 1043A(3) Corporations Act. It provides:

For the purposes of the application of the Criminal Code in relation to an offence based on subsection (1) or (2):
(a) paragraph (1)(a) is a physical element, the fault element for which is as specified in paragraph (1)(b); and,
(b) paragraph (2)(a) is a physical element, the fault element for which is as specified in paragraph (2)(b).”
1. The Criminal Code in ss 5.1, 5.2, 5.4 and 5.5 respectively, provide for the fault element that would attach to the physical element of the offence. In this instance, in respect of the disposal of the shares, the fault element might be intention, knowledge, recklessness or negligence. In s 5.4 in the Criminal Code, the concept of recklessness is addressed in the following terms:

“(1). A person is reckless with respect to a circumstance if:

(a) he or she is aware of a substantial risk that the circumstance exists or will exist; and
(b) having regard to the circumstances known to him or her, it is unjustifiable to take the risk.

(2) A person is reckless with respect to a result if:

(a) he or she is aware of a substantial risk that the result will occur; and
(b) having regard to the circumstances known to him or her, it is unjustifiable to take the risk.

(3) The question whether taking a risk is unjustifiable is one of fact.

(4) If recklessness is a fault element for a physical element of an offence, proof of intention, knowledge or recklessness will satisfy that fault element.”

The concept of negligence is provided in s 5.5 in the following terms:

“(1) A person is negligent with respect to a physical element of an offence if his or her conduct involves:

(a) such a great falling short of the standard of care that a reasonable person would exercise in the circumstances; and
(b) such a high risk that the physical element exists or will exist; that the conduct merits criminal punishment for the offence.”

The statement of facts to which I have already referred, as expressed, leaves alive the possibility of the prosecution to be considered in terms of recklessness or negligence. However, having reviewed the material, including the written submissions on behalf of the parties, and to the extent that I was able to do so this morning, the transcript of the proceedings on 15 May 2020 when senior counsel for each of the parties presented comprehensive submissions addressing what they provided previously in writing, I proceed upon the basis that the Court is here dealing with the concept of negligence as the fault element and not recklessness.
The provision upon which this prosecution is brought, contemplates all three levels of fault, namely intention and/or knowledge, recklessness, and negligence, and accordingly, under the provision as it was expressed at the time, and the penalty provided, the more serious examples of this offence would involve knowledge or intention, perhaps to a lesser extent recklessness, and negligence would be more likely to be found toward the lower end of the range of objective seriousness for such misconduct.
Nonetheless, there was a contest between the parties upon the degree of negligence exhibited by the offender in the conduct upon which he engaged and from which he has been prosecuted.
The position advanced by the Crown, was that the line provided in s 17A Crimes Act 1914 had been crossed and that a custodial sentence was appropriate, although in the particular circumstances of this case, it was not necessary for the offender to be incarcerated, and I was invited to the provision which allows for the immediate release of the offender, subject to a recognizance that would be structured in appropriate terms.
Counsel for the offender however urged with some vigour, both in written submissions and in court, that the line providing the option of last resort had not been crossed.
I should announce at this stage that I have come to the view that the Crown submission is the one that I should accept, that there should be specified a term of imprisonment, but that the immediate release of the offender should follow subject to an appropriate recognizance that he would be required to enter forthwith.

The Facts

I shall now turn to the facts. There are some disputes identified in the document, with colour highlighting, and these are the subject of a further document included in the material before me which identifies the respective positions taken by the parties. Both counsel addressed these points of contest in their written and oral submissions.
The facts inform me that between 24 May 2005 and 13 January 2017, the offender occupied the position of Chief Executive Officer of the company, Sirtex Medical Limited. On 26 October 2016, he gave instructions to dispose of 74,968 ordinary shares in the company. He possessed inside information at the time. This was in terms of the actual dosage sales of a product marketed by the company for the period from July to October 2016, which was not generally available but which if it had been a reasonable person would have expected it to have a material effect on the price or value of those shares. Paragraph 3 is the subject of challenge. I will quote it:

“The 74,968 SRX shares sold at an average price of $28.56 per share. The total gross value of the sale of the shares was $2,141,310.98. On 9 December 2016, after actual dose sales were reported by Sirtex to the market, reflecting downgraded dosage sales growth forecasts were reported by Sirtex to the market, the opening price of SRX shares on the ASX fell to $13.01 per share. This represented a decrease of approximately 49% from the previous day’s closing price of $25.49. SRX shares closed later that day at $16 per share. By reference to the volume weighted average price (VWAP) of SRX shares on 9 December 2016, had the offender not engaged in the insider trading, the 74,968 SRX shares would have been valued in the order of $1,120,140.80.”

The difference between the two sums is $1,021,170.18. In the Crown’s written submissions, those figures were corrected with a slight adjustment.
Issue is taken in relation to this though on behalf of the offender. To summarise, it is said that it was fallacious to calculate the loss or consider the seriousness of the misconduct by reference to 9 December 2016, when the transaction occurred, because the state of knowledge that the offender ought to be assessed as at the date of the transaction upon which the prosecution has been brought, namely, 26 October 2016.
I have considered carefully what was written in the submissions on behalf of the offender and what was said on his behalf by Mr Game SC. I am of a view that to approach the point in such a fashion is rather more narrow than appropriate, and that it should not be overlooked that upon the transaction date, 26 October 2016, the inside information was held. When it became known to the market, there was deterioration in the market’s perception of the company, leading to a downturn in the price or value of the shares which reached its low point on 9 December 2016.
The precise quantification of the loss avoided by the offender might require consideration by the Court of what was known by the offender at the point of the sale and what might have been anticipated in the market in due course, but I am satisfied, having considered the material overall, that what the Crown advanced is the correct approach.
The facts then deal with the operation of the company, Sirtex Medical Limited.
Between 24 May 2005 and 13 January 2017, the offender was the Chief Executive Officer of the company and a Director from 28 June 2005 to 13 January 2017. Before joining the company, he held Chief Executive Officer and Senior Executive positions in the commercial and industry sector including ten years with another nominated public company.
Sirtex is a global health care company with the main commercialised product a medical device used for targeting radiation therapy to treat patients with inoperable liver cancer. The device was known as the SIR‑Spheres® Y‑90, risen microspheres, the product hereinafter referred to as SIR‑Spheres.
The ordinary fully paid shares of the company have traded under the stock code SRX since 24 August 2000. Prior to the sale of the company in 2018 to another company, CDH Investments, for $33.60 per share, Sirtex was in the S&P/ASX 200 index, representing the top 200 companies by way of market capitalisation. Issue taken with regard to the reference here to the sum of $33.60 per share, it is said to be not relevant to the determination of the sentence in this matter.
The offender’s remuneration package, performance rights and trading policy is then next discussed. There were issued performance rights to certain employees under the Executive Rights Plan. The performance rights had a life of up to three years, vesting on or shortly after 30 June in the third year after they were granted, subject to specific performance conditions being met. Upon vesting, a performance right conferred upon the employee the right to exercise the performance rights to the value of an ordinary SRX share. On exercise, the trustee for the Sirtex executive share trust, subscribed for or acquired SRX shares on behalf of the employee for no consideration. The trustee held those SRX shares until the employee directed the trustee to transfer the SRX shares to the employee or sell the SRX shares and remit the proceeds to the employee.
The trustee for this purpose was Pacific Custodians Pty Ltd. The offender’s remuneration package from the company included long term incentives which in turn included the grant of performance rights. During the period of his employment he was granted performance rights which vested and were exercised for SRX shares in 2010, 2011, 2012, 2013, 2014 and 2015. The facts include in each of the paragraphs providing this information, the performance rights which were granted in each of those years and when the rights vested and when exercised.
In 2010, there were 90,106 performance rights which vested on 3 July 2013, subsequently exercised for shares. In 2011, the grant was 92,000 performance rights which vested on 9 July 2014 and subsequently exercised for 91,947 shares. In 2012, the grant was of 140,000 performance rights which vested on 13 July 2015 and these were subsequently exercised for 139,965 shares. In 2013, he was granted 115,000 performance rights which vested on 25 July 2016. These were subsequently exercised for 114,968 SRX shares. In 2014, the offender was granted 73,000 performance rights which were forfeited prior to vesting, and in 2015 the offender was granted 45,930 performance rights which were forfeited prior to vesting.
During the relevant years, he sold a portion of his SRX shares and retained the remainder. On 15 July 2013, he sold 30,106 of the shares acquired in that year. On or around 14 July 2014, the offender sold 51,947 of the shares acquired that year. On or around 18 July 2015, the offender sold 79,965 of the shares acquired for that year.
On each occasion, an Appendix 3Y, “Change of Directors Interest Notice”, was released on ASX in relation to the offender’s sale of shares. In relation to the offender’s sale of shares on 26 October 2016, an Appendix 3Y Notice was released on 1 November 2016. On 7 November 2016, a further announcement was released on ASX, stating the reason for the sale of the shares which was to cover the tax incurred in respect to the recently vested tranche of performance rights.
As I understand the offender’s case, this was in accordance with his usual practice to meet his taxation obligations for preceding years.
As at 30 June 2016, the offender held 160,000 shares in Sirtex, these being the shares he retained.
Other than the aforementioned trades, the offender did not engage in any share trading.
The company had a trading policy. This was dated June 2013 and prohibited trading in SRX shares by any executive, employee or director at any time when in possession of unpublished price sensitive information in relation to Sirtex shares and during the following blackout periods.
These were the period commencing four weeks’ prior to the release of full year results to the market, the period commencing four weeks' prior to the release of half year results to the market, and the period commencing four weeks' prior to an annual general meeting. Section 8 of the policy, included an overview of the insider trading prohibition and information that constitutes inside information including examples of inside information of Sirtex. The policy stated:

“All Sirtex Personnel must at all times comply with the Corporations Act, 2011 (Cth) (Act) prohibition against insider trading. Sirtex Personnel must not, at any time, directly or indirectly, buy or sell shares in Sirtex or other securities of any company, when in possession of unpublished price sensitive information which could materially affect the price or value of those securities. Accordingly, when a Sirtex Personnel decides to ‘deal’ in securities, the overriding factor for consideration is whether or not they are in possession of inside information in relation to the relevant securities.

8.1 insider trading prohibition

The insider trading prohibition is set out in the Act. In summary, the prohibition means that a person who is in possession of inside information in relation to a particular security, must not:

apply for, acquire or dispose of the relevant securities or make any agreement to do any of those things.”

The policy also included advice as to the definition of inside information and the examples of what inside information at Sirtex might be. This I shall quote:

“The following are some examples of information that might constitute inside information to Sirtex:

Prior to the announcement of half and full year results, information that the relevant results will fall outside the boundaries of market expectations.”

The offender in his role as Chief Executive Officer, was required to familiarise himself with the company’s policies, which included the securities trading policy. Sections 5 and 12 of the policy nominate the Chief Executive Officer as one of the company officers responsible for the policy and a contact point for additional guidance upon the policies required. In his role as CEO, the offender approved the securities trading policy on 15 May 2013 and thus it is said that at all relevant times he was aware of the legal prohibitions against insider trading. He was also required to review the Code of Conduct for the company which provided an overview of company policies including the securities trading policy.
The drafts of the Sirtex Code of Conduct circulated to the offender stated:

“Sirtex is an Australian listed entity and is required by the listing rules to have a trading policy;

and,

Failure to comply with this policy may result in severe consequences, including internal disciplinary action, such as termination of employment without notice. Failure to comply could also include civil and criminal penalties.

The violation of this policy may also breach legal or regulatory requirements. If this appears to have had happened, Sirtex may refer to the matter to the appropriate authorities, which could lead to criminal charges, penalties, fines or imprisonment.

All Sirtex employees must, at all times, comply with Australia’s Corporations Act 2001 which prohibits insider trading. Sirtex employees must not, at any time directly or indirectly, buy or sell shares in Sirtex or other securities or any company, when in possession of unpublished price sensitive information, which could materially affect the price or value of those securities.”

The Sirtex Code of Conduct also repeated the explanation of the insider trading prohibition as well as the examples of insider information described in securities trading policy.
The deterioration in the price of the company’s shares or their value, arose it appears as a consequence of the variation to forecasts of the dose sales for the SIR‑Spheres. The company’s revenues were dependent upon the sales of that product. It is available in over 40 countries. The operation was divided into three geographic regions, namely, North and Latin America, Europe, Middle East and Africa, and Asia Pacific. The sales of the product were referred to in the financial statements and other reports as, “dose sales”. The total dose sales increased steadily each year in the five financial years preceding 30 June 2016. In the beginning of 2012 these were 6,141; 2013 - 7,299; 2014 - 8,561; 2015 - 10,252; and 2016 - 11,931.
In its first ten years, the company released its dose sale figures on the ASX every quarter. By way of example, on 3 July 2014, the company announced to the market that dose sales had grown 27.1% for the quarter ending 30 June 2014. The notification included references to the Americas with dose sale growth of 33%, in Europe, Middle East and Africa a growth of 16.7% and in the Asia Pacific a growth of 11.7%. The publication included the following:

“Dose sales have been a key measure of the company’s estimates performance.”

The offender was quoted in that announcement in the following terms:

“This is a significant milestone. Sirtex has now achieved the impressive record of ten years of consistent quarterly growth and we expect this trend will continue. Sirtex’s focus is on achieving its 20/20 Vision, with the aim to deliver an acceleration in growth in the medium to longer term.

The company announced that from July 2014 onward it would release its dose sales figures on the ASX only every six months.
On 24 February 2016, the company reported its half year actual dose sales for the period between 1 July and 31 December 2015 in its ASX announcement and investor presentation. It announced that dose sales had increased globally by 15.7% and individually by 18.8% in the American market, 8.8% in the Europe, Middle Eastern and African market, and by 9.3% in the Asia Pacific market.
On 11 July 2016, the full year actual dose sales for the financial year ended 30 June 2016 were announced. Growth in dose sales for that financial year was approximately 16.4%.
On 24 August 2016, the company announced its results on the ASX for the financial year, ending 30 June 2016. One of the documents released by the company had the title, “32.8% Increase in FY16NPAT to $53.6 million.” It summarised the results for the period ending that date, 30 June 2016, and included a section headed, “Outlook”, which represented:

“We anticipate double digit dose sales growth will continue FY17.”

Consistent with the company policy of reporting dose sales every six months, actual dose sales for the period July to October 2016 were not intended for release on the ASX until February 2017. These were not released prior to 9 December 2016, and were not otherwise publicly disseminated by the company. On 25 October 2016, the company held its annual general meeting. It released on the ASX a copy of the CEO’s AGM address and presentation prepared by the Global Investor Relation’s Manager, a Mr Duthy, and approved by the Board. This included the following:

“We anticipate double‑digit dose sales. Growth will continue in FY17 whilst we await the results of the three major clinical studies, due to report findings in the first half of calendar year 2017.”

This was accompanied by a PowerPoint presentation, and a heading, “Outlook - FY17”.
The company revised its sales’ growth forecast for financial year ended 30 June 2017, as communicated to the market on 24 August 2016 ASX announcement and 25 October 2016 ASX announcement, on 9 December 2016 when at 8.27am, the company released a trading update which stated:

“...worldwide first half dose sales growth is anticipated to be in the order of 4‑6% compared to growth in the prior corresponding period...of 15.7%...”,

and,

“[o]n a full year basis, worldwide dose sales growth is anticipated to be in the order of 5‑11% compared to growth of 16.4% achieved in FY16. This is referred to as the 9 December 2016 announcement.”

The downgraded growth forecasts on 9 December 2016 were informed by the actual dose sales for the financial year 2017 period preceding the announcement. This included the actual dose sales information for the period July to October 2016. As noted above, the SRX share price fell by about 49% after the announcement.
With regard to the concept of insider information impacting the offender, through his position as Chief Executive Officer and Director of the company he possessed the inside information of the actual global dose sales of the product for the period 1 July to 26 October 2016.
In the period July to October 2016, he and others in the company management team, including Mr Duthy to whom I earlier referred, and Mr Smith, the Chief Financial Officer and a Company Secretary, came into possession of the following confidential information about the company’s dose sales.
First of all, for daily global sales information the offender and the management team received each weekday an email attaching a daily global sales report that included tables and charts setting out up‑to‑date monthly regional and global dose sales figures by volume and value for the 2017 financial year, contrasted against budget and the previous corresponding periods. This was received as well by a Mr Cade, a Mr Kall, a Mr Hardy and a Ms Steyn.
Moreover, there were monthly management reports prepared by the regional managers for the Americas, for Europe, Middle East and Africa, and for Australia Pacific. The monthly regional management reports from three geographical areas were received by the offender and the management team around the middle of each month and each report included the previous month’s dose sales figures for the region, both actual and budgeted.
The offender also prepared monthly Chief Executive Officer's reports for the Sirtex Board of Directors. These provided a summary of activities since the previous Board meeting and included up‑to‑date actual monthly and year to date dose sales figures, and a comparison against the budgeted monthly and year‑to‑date dose sales figures. They included other key performance measures such as actual and budgeted sales revenue and operating profit for the month and year to date. Dose sales and revenue performance for each of the three regional areas were also summarised within the Chief Executive Officer’s reports based on upon information in the monthly regional management reports received by the offender.
The Chief Executive Officer report formed part of the Board pack distributed to the directors prior to the monthly Board meetings normally held on the last week of each month. The report was tabled at each Board meeting and taken as read by the Chair with the offender providing a brief update at the monthly Board meeting. On 1 June 2016, the Board approved the budget for the financial year ending 30 June 2017. The budgeted sales for the financial year ending 30 June 2017 were 13,842, representing an approximate growth of 16% from the previous year.
The facts then provide an analysis for July 2016. On 22 July 2016, the finalised June 2016 Chief Executive Officer report was distributed by email to the Board under the heading, “Future Outlook/Strategic Issues”. It included the following:

“June dose sales ended below budget and just a few doses short of our revised forecast. At the time of writing, the July dose sales look like falling marginally short of budget.”

On 26 July 2016, the Board meeting was held at which the June 2016 Chief Executive Officer report was tabled. Within this period, the vesting of the performance rights for senior executives and senior managers was delayed in July 2016. The offender’s performance rights vested and were exercised on 25 July 2016, as I earlier noted, resulting in the issue of 114,968 SRX shares at forfeiture of 32 performance rights.
On 26 July 2016 at 5.11pm, the offender and others were notified that there had been a delay in issuing SRX shares pursuant to the exercise of performance rights. On that date at 5.19pm, the offender was notified that there had been a specific delay in relation to his capacity to trade the SRX shares. As a result, his shares were released shortly before a share trade blackout period. The offender was advised that notwithstanding the blackout period, a request to transfer shares received up until close of business on 27 July 2016, would be processed. He responded at 5.54pm on 26 July 2016, that he did plan to sell some of the SRX shares but would wait until after the scheduled blackout period which was to commence on 27 July 2016 and end in late August that year.
Pursuant to the Securities Trading Policy, between 27 July and 23 August 2016, a share trading blackout period was in place prior to the release of the full year results on 24 August 2016 and within that period the offender was precluded from trading in his shares. In August 2016, actual dosage sale information was received. On 11 August 2016, he received by email from Mr Lange, Chief Executive Officer for Europe, the Middle East and Africa, and the Australia Pacific geographical regions the July 2016 monthly management report for the Europe, Middle Eastern and Africa region. It included the following:

“SMG ended the month with 202 commercial doses versus a budget of 255 (21% behind budget; 8% behind prior year)...August had started well however activity has slowed during the past week (since week commencing August 8th) due to Summer vacation being in full swing in Italy and Southern Germany.”

On that same day, the offender received by email from Mr Lange, the July 2016 monthly management report for Australia Pacific geographical regions. The report noted:

“ANZ was below plan for the month, with 29/44, 66% of plan and below PY by 6% due to an unusual number of people away for an extended break as a result of school holidays;

and,

APAC

FY17 has started slowly. Sales in APAC finished the month 87% to budget, however slightly ahead of prior year by 6%.”

On 12 August 2016, the offender, and the Chief Financial Officer and Company Secretary, Mr Smith, received an email from Mr Hardy, the Global Head of Operations at Sirtex in which he advised that August 2016 dose sales estimates as at that date across all regions totalled 1,103 compared to the budget of 1,944 units. Actual dose sales for August 2016 as later reported in the monthly Chief Executive Officer’s report were 1,107 units which was 3% below budget but 22% above the corresponding period for the prior year.
On 14 August 2016, the offender received by email from Kevin Richardson, the Chief Executive Officer of the American operations, the July 2016 monthly management report for the Americas. This noted that dose sales for July 2016, were 2.2% over budget and 4.2% below the previous year. On 17 August 2016, the offender prepared a draft of the July 2016 Chief Executive Officer’s report and emailed it to the Global Financial Controller of the company, Mr Kall, for further information to be inserted. On 19 August 2016, the offender and the company Board members received the finalised Board papers for the meeting to be held on 23 August 2016. These included the July 2016 CEO report which contained the following:

“FY17 start with 935 doses sold in July which is 5.1% or 50 doses under budget. Last year’s dose sales were 4.3% higher with three more selling days in July 2015 compared to July 2016. The shortest selling month was felt particularly in the Americas region, being 2.2% over budget but .2% under last year. Both EMEA and APAC finished under budget and under last year.”

The report included the following,

“July sales revenue reached $17.6M which is 4.6% under budget and 7.3% under last year.”

The report also continued,

“At time of writing August dose sales looked like falling a marginally short of budget.”

In or around 24 August 2016, the offender raised with Mr Duthy, the Global Head of Investor Relations, the possibility of selling SRX shares in the context of the company’s intention to make an announcement to the market regarding meta‑analysis of two clinical studies. This is referred to as the VESPRO Study. The offender said,

“I’m thinking about selling some shares. We have the VESPRO Study initiating. What do you think?”

Mr Duthy said,

“A VESPRO Study is not in the public domain and you need to consider that in your thinking.”

The results of this study were not released until 7 October 2016. In or around 24 August 2016, the offender also raised with Mr Smith (Chief Financial Officer and Company Secretary) the possibility of selling SRX shares. The offender said,

“I am thinking of selling some shares.”

Mr Smith replied,

“We are now outside the blackout period and so it is okay to sell subject to any information you may have - it is a judgement call you need to make.”

The submissions on behalf of the offender rely upon the steps taken by the offender seeking advice with regard to his intention to sell shares and there is reliance upon the responses that I have quoted, said to minimise the extent of the offender’s moral culpability. However the assessment of that submission must be made within the context of the information that was available to the offender, his status and role within the company, and his experience. I do not accept that he could disavow his obligations to exercise proper judgement in the decision he wished to make, simply by speaking with others who might be seen to be incorrect in the response given to him.
Between 25 August and 26 September 2016, the offender was permitted to trade in shares because there was no trading blackout. He did not trade his shares until after the announcement that was made by way of the VESPRO Study release. That was within the blackout period preceding the annual general meeting on 25 October 2016.
In September 2016, there was received further information regarding actual dosage sales. On 14 September 2016, the offender received by email from Mr Richardson (Chief Executive Officer of the American operations), the August 2016 monthly management report for the Americas, noting that the dose sales for that region were 1.9% under budget at 809 units sold. On 16 September 2016, the offender received by email from Mr Lange (Chief Executive Officer for Europe, the Middle East and Africa and the Australia Pacific) the August 2016 monthly management report for the Europe, Middle East and African region. Sales for the month closed at 202 units, 4% under budget. On 16 September 2016, the offender received by email from Mr Lange the August 2016 monthly management report for the Australia Pacific region. This noted that dose sales in the Australian, New Zealand, and Asia Pacific regions were below budget for the month.
I perhaps have omitted reference to those areas as Australia and New Zealand and Asia Pacific, which I shall note here.
On 21 September 2016, the offender prepared a draft for the August 2016 Chief Executive Officer’s report and emailed it to Ms Steyn and Ms Lee‑Davis from the company’s financial reporting and the management area, with further financial information to be inserted. The same day he sent an email to Mr Richardson in which he said:

“I was looking at dose sales for the month which looked like falling well below budget, can you provide an insight and estimate for next month?”

There was a response to the offender on 22 September 2016 in which Mr Richardson estimated that the September 2016 dose sales for the Americas region would fall below budget with a similar projected decline for October 2016. In the same email Mr Richardson detailed the reasons for the lower dose sales in the Americas and said, “No one is happy about the way the month is finishing up.”
On 23 September 2016, the offender and the Sirtex Board members received by email the papers for the Board meeting to be held on 27 September 2016. Included in the Board pack was the August 2016 Chief Executive Officer’s report which noted:

“Dose sales in August (1,107 units) were 3.25% under budget (1,144 units) and 22.2% over last year (906 units). Year to date (YTD) dose sales of 2,042 units are 4.1% under budget and 8.4% over last year.”

The report included also:

“August dose sales marginally short of budget as expected, closed lower than expected at 50 doses below budget. At time of writing September dose sales are slow in all regions and look like falling well short of budget.”

The minutes of the Board meeting on 27 September 2016 include:

“G. Wong highlighted dose sales as a concern being behind Budget by 4% and only 3.5% higher than the same period in the prior year.”

In October 2016, dosage sale information was received. On 13 October 2016 the offender received by email from Mr Richardson the September 2016 monthly management report for the Americas. This included,

“Sept. was 12.1% under plan and 8.2% under PY [prior year] due to one less selling day in the month vs same month last year.”

The September 2016 monthly management report for the Americas showed actual dose sales of 663 units against budget dose sales for that month of 754 units, 12% under budget, and the year‑to‑date actual dose sales of 2,130 units, compared to budget dose sales of 2,223 units, 4.2% under budget.

On 16 October 2016, the offender received by email from Mr Lange the September 2016 monthly management report for Europe, Middle East and Africa. This included:

“September proved a challenging month and commercial dose sales closing the month at 201, 0.5% behind prior year and 14% behind budget...compared to budget, most of the major markets have under‑performed this month.”

On 16 October 2016, the offender received by email from Mr Lange, the September 2016 monthly management report for Asia, Australia and New Zealand, and Asia Pacific. The report noted,

“Sales in ANZ were below plan for month of achieving 33 of 42 commercial doses; 7.5% of budget and 94% below prior year.”

He also concluded:

“Commercial dose sales in SEA (South East Asia) completed the month with 26 commercial doses or 10% below budget. However, 8% over prior year...YTD commercial doses sales are behind budget by 6%.”

On 17 October 2016, the offender received an email from Mr Kall addressed to all Sirtex executives, attaching the 2017 first quarter financial results summary for Sirtex. This showed global dose sales for the first three months of the 2017 financial year at 2,982 units being 3.2% above sales for the previous year and a variance to budget of 7%, while sales revenue against budget was down 8% and 1.2% below revenue for the previous year. (I note that I am referring to para 69 in the agreed facts at this point. To avoid the perception of confusion, the 2017 first quarter financial results should be understood to be a reference to the financial year ending in June 2017 and thus the period there discussed is with regard to the first quarter which commenced on 1 July 2016). Mr Kall’s email further noted:

“During the first half of November, we will inform about the financial results for the first four months of FY17. We will then also consult with you on a high level forecast of top and bottom line for the remaining eight months of the year, and whether an amendment to the budget should be proposed to the Board.”

On 25 October 2016, the company held its annual general meeting and the 25 October 2016, ASX announcement was made to the market to which I referred, as discussed at para 34 in the document. On the same day at 3.33pm, the offender sent an email to Mr Hill in which he stated:

“Meeting went very well, no poll and all resolutions passed easily...share price currently up 2.3% but was up even more after the AGM.”

The global sales report received by the offender on 26 October 2016 at 8.04am, showed global monthly dose sales for September 2016 to be 13% of the budget, and October 2016, with three more business days left in the month, being 9% below budget. The report also showed that from July 2016 to September 2016, total global sales were 3% higher than the same period the previous year. I should pause to note that it has been said on behalf of the offender with regard to the areas of contest, to which I have referred briefly, that although these sales were under the budget, in many instances, sales were in fact higher on the preceding year, a matter that I would bring to account in the assessment of the offender’s moral culpability.
The facts finally come to the trading upon which the offender was engaged and which has given rise to the prosecution. On the afternoon of 25 October or the morning of 26 October 2016, the offender spoke with Mr Smith, the Chief Financial Officer and Company Secretary, again with regard to the possibility of selling shares. He said,

“I will be selling some shares, and I just want to confirm that we are outside the blackout period.”

Mr Smith said:

“You are permitted to sell by the policy, you just need to confirm that you don’t have any information. You should probably mention it to the directors and Richard (Hill).”

He said:

“I have spoken to Richard. Neither the Chair of the Board, Mr Hill, nor the Chief Financial Officer, Mr Smith, express concern over his share trade prior to the sale of the shares upon which I have already commented.”

At 11.24am on 26 October 2016, the offender instructed Pacific Custodians to sell 74,968 SRX shares by their online portal. He emailed confirmation, a confirmation receipt of this instruction. This was sent to the broker, Australian Investment Exchange Limited, a subsidiary of Commonwealth Securities Limited, by what is called, “the straight through process”. When he sent this direction, he knew that an Appendix 3Y, Change of Directors Interest Notice was required to be released on ASX after the sale of the shares.
At 1.59pm on 26 October 2016 the offender sent by email to Mr Kall a draft of the Chief Executive Officer’s monthly report. The draft report included,

“September dose sales falls below budget. At the time of writing, October dose sales will be probably be 9% below budget.”

The draft report repeated excerpts from the three regional monthly management reports for September 2016 with respect to the dose sales for the month in all regions being under budget.
At 4.47pm on 26 October 2016, the offender sent an email to Mr Richardson and Mr Lange, copied to Mr Smith. The email stated (my emphasis):

“Overall dose sales are not as strong as we hoped. Looking at the first six months of the current financial year, if I assume the budget dose sales in all regions in November and December, then for the six months, dose sales growth will be less than 9% ahead of last year. This compares to the 15.7% growth we reported for the first half of FY16. In growth, in actual doses sold, that will be approx. 500 this year compared to 778 growth last year. This will of course not resonant [sic] too well in the market. Would you please look at what you expect in dose sales for the remainder of the first half of FY17 and also what the expectations will be for the second half of FY17. We will need to develop our messaging to the market.”

Significant in those representations are the following two passages:

“This will of course not resonant [sic] too well in the market”,

and,

“We will need to develop our messaging to the market.”

By the close of trading on 26 October 2016, all 74,968 of the offender’s SRX shares had been sold at a volume weighted average price of $28.56. The total gross value of the sales for these shares was, as I previously noted, with net proceeds of $2,135,378.30 after brokerage costs.
On 28 October 2016, the offender and the Sirtex directors received by email the papers for the Board meeting for 3 November 2016. Included in the pack was the finalised September 2016 Chief Executor Officer’s report which noted:

“September dose sales (940 units) were 12.9% under budget (1,079 units) and 6.7% under last year (1,007 units). On a per treatment day basis, dose sales have been flat compared to September last year (63 doses), and down from the average of 67 doses for the last six months. Dose sales for the first quarter of 2,982 units are 7.0% under budget and 3.2% over last year. All three regions have been underperforming the budget. The Americas region is 4.2% under budget for the first quarter. APAC is 13.3% under budget, and EMEA is 13.6% under budget. September sales revenue reached $17.6M which is 14.5% under budget and 12.6% under last year. 1st quarter sales revenue at $55.9M is 8.0% under budget and 1.2% under last year.”

On 1 November 2016, the offender sought confirmation of the sale of the SRX shares and details in order to lodge the appropriate notification of the sale with the ASX. He then emailed Mr Duthy and Mr Smith in the following terms:

“I have sold 74,968 shares, the trade was on 26/10/16. I was only informed today by Link. Will you please lodge the appropriate form with the ASX. If you require any further information, please let me know.”

On that date, the sale proceeds were transferred to the offender’s bank account and he transferred from that account all but $378.37 to his online saver account and as at 14 February 2017 the funds remained in his online saver bank account.
There has been money quarantined by the offender to which I shall refer when dealing with his subjective case.
On 1 November 2016 an Appendix 3Y Change of Directors Interest Notice was released on ASX in relation to the sales of shares. On 2 November 2016, a second such notice was released, updated to include the value of consideration obtained for the sale of the shares and to correct the date of change.
The perception demonstrated by the offender in his request for advice concerning his proposed sale of shares and his comment regarding the resonance of the performance of the company with the market and the need to develop their messaging is reflected in what occurred next. Moreover, in the following days a number a shareholders contacted Sirtex to raise their concerns about the offender’s disposal of his shares and to request an explanation as to why he did so.
On 7 November 2016, an announcement entitled, “Statement by CEO on Sale of Shares”, was released on ASX. This was in the following terms:

“Today, Gilman Wong, Chief Executive Officer of Sirtex Medical Limited (ASX:SRX) made the following the statement.

‘On 26 October, 2016, I sold 74,968 shares of the 274,968 shares that I held. To clarify, the reason for the sale of shares was to cover the tax incurred in relation to the recently vested tranche of rights. This was in line with my normal practice of the past three years. I informed the Chairman in July 2016 that it was my intention to sell these shares’.”

The Statement of Facts then continues with a discussion of the share price in the periods between July and December 2016, and the announcement on 9 December 2016 and beneath the heading, “The Offender’s State of Mind”, the following appears:

“At the time of trading on 26 October 2016, the offender was aware of Sirtex’s actual dose sales figures from the commencement of the 2017 financial year. He was aware that the company had not reported this information to the market. He was also aware that the last market announcement Sirtex had made was that it expected double‑digit sales growth to continue in FY17 whilst it awaited the results of three major clinical studies due in the first have (sic) of 2017. The actual dose sales results for the 2017 financial year generally suggested the level of performance which fell short of this expectation. In the circumstances, the offender ought reasonably to have known that he was in possession of information which was not generally available, and which, if generally available, a reasonable person would have expected to have a material effect on the share price.”

The document then deals with the loss avoided by the transaction. It is suggested in this part of the Statement of Facts that between $939,214.30 and $1,165,752.40 was what the offender would have received. By reference to the VWAP of SRX shares on 9 December 2016 of $14.945214, he would have received $1,020,673.28 less than when he did in fact sell them.
His employment was terminated on 13 January 2017 after an internal investigation into the sale on 26 October 2016. He forfeited 118,930 performance rights as a result.
He has co‑operated with ASIC in the investigation of this offence and the nature and extent of the co‑operation is accepted in mitigation of the penalty that he might have otherwise suffered as a result of this offence.
I should now just touch briefly upon the areas of contest that were identified and to which I have made brief reference.
Para [3] in the statement of agreed facts speaks of the value of the shares as at 9 December 2016. That is opposed on behalf of the offender as I earlier discussed in the course of which I expressed the view that the approach taken on behalf of the offender was rather more narrow than appropriate.
In para [6], there is reference to the $33.60 per share which was the price paid upon the acquisition of the company by another entity. It is said on behalf of the Crown that this is a matter that is not relevant. The offender presses for the inclusion of this information to indicate that the value of the company rebounded in due course after these events up to the point when the company was on‑sold. I accept that is a matter that I should bring to account in the overall assessment of the factual matrix within which the offence was committed.
Paragraph [96] includes the passage:

“The actual dose sales results for the 2017 financial year generally suggested a level of performance which fell short of this expectation.”

This was the subject of challenge on behalf of the offender. It is said that this is a matter of submission rather than of evidence or factual analysis upon which sentence is to be assessed. One way or another, it is a matter that I bring to account.
Paragraph [97] deals with the lesser amount he would have received had the sales been transacted on 9 December 2016 and I have referred to that sum of $1,020,673.28. The parties are not agreed as to the method of calculation. It was anticipated that that would be resolved for the time of the hearing.

The Seriousness of the Misconduct

I have dealt with the statement of agreed facts and have already commented where this offending is to be seen within the context of the legislation creating the offence. This was a conduct based upon negligence rather than recklessness or intent and knowledge but that is not the end of the matter. One needs to consider the conduct, to assess the seriousness within the context of the offending itself. The dispute that arose in the course of the contest was, as I noted earlier, with regard to the degree of negligence exhibited by the offender.
On his behalf, the submissions included the proposition that his criminality is at the relatively low level such that the threshold in s 17A Crimes Act 1914 has not been crossed. I do not agree with that submission for the reasons I earlier touched upon, namely, his position within the company, his experience and the communication of information to and from the offender to which I referred in the course of the rehearsal of the agreed statement of facts.
On his behalf, it was said that I would note that he followed the practice that he had adopted in preceding years, trading shares so that he might meet his tax obligations. The case is not presented against him on the basis that he was armed with knowledge, which he knew would impact upon the market and reduce the value of the shares, but was able to dispose of his shares before the market might have responded to information that was yet to be published. I have proceeded upon that understanding but at the same time I note by reason of his seniority, by reason of his position, by reason of his experience, he ought to have known that the information he had would have impacted upon those in the market not armed with the information that he and his colleagues had before them.
There was also a submission made with regard to the materiality of the information. This was, as I understood it, within the context of the evolution of the company performance measured against the sales, both actual and budgeted. I have noted that the submission includes that there was a reduction when performance was measured against budgeted outcomes, and yet in many instances, the sales were ahead of sales in the preceding year.
It was said on behalf of the offender that the proposition that 9 December 2016 was the salient date was in contest. The Crown’s position was that this informed the materiality of the inside information in the case, and by reason of his sale of the shares on 25 and 26 October 2016, he avoided a significant or substantial diminution in value. These propositions were challenged.
I accept that there was a significant diminution in the value of the shares. Whether the term “substantial” should also be applied is a question of judgement, but it at least was significant, and although this matter was presented not upon the basis that this was his intended purpose, it was the consequence of how the company was performing, and he in fact did avoid the diminution in the value of his shares. Thus the extent of the materiality of the inside information is informed.
Mr Game SC and junior counsel provided a thorough analysis of the projected sales and actual sales of the company’s product over the initial pages in their written submissions, but as the Crown pointed out, practically in my judgement, in the course of their submissions at p 16 of the transcript at line 38, the Court at least to some extent did not need to engage upon the difficult task of drawing inferences from various subjective facts because of the conclusions attributed to the offender in the documents that were summarised in the agreed statement, reflecting the analyses which others within the company had performed, which ultimately included the recognition that the information there contained did not present, to quote the Crown, “a happy picture”, for the company.

The Offender

The offender is a person of otherwise impeccable character. Born in 1950, he is now 70 years of age or will be later this year. As a consequence of these events, he was unemployed and now retired. He has not the trappings of wealth, consistent with someone who has abused or manipulated his position of trust with self‑enrichment his purpose. Indeed, he has put aside the proceeds from the sale of the shares. They are resting in an account. There is an undertaking provided to the Court that the fund, sitting at the present time at $939,214.13, will be available to meet any proceeds order that might be sought by the Australian Federal Police.
The Director of Public Prosecutions for the Commonwealth is not intending to pursue that amount or any part of it but it is unknown at that stage, whether the Australian Federal Police will exercise their powers in this regard and take that course. Should there be no claim upon that money by those authorities; the fund will be made available to the charity nominated in the written undertaking. This is expressed in the following terms:

“I Gilman Edward Wong undertake to make a charitable donation of $939,214.13 to the Cancer Council of Australia within two weeks (14 calendar days) from the expiry of a period of nine months from the conviction day within, as defined in the proceeds of Crime Act 2002 (Cth), unless, within that time, the Australian Federal Police (AFP) gives notice of an intention to commence proceedings against me only for that.

In the event of such proceedings, ..., I undertake to make a charitable donation of the difference between $939,214.13 and any amount ordered to be paid in those proceedings within two weeks from the resolution of those proceedings...”

Resolution is defined to include a court order or resolution by consent to the AFP or a statement from the AFP, that they will not commence proceedings. That is a significant demonstration of contrition and recognition of his wrongdoing.
There is a sentence assessment report. It confirms his unemployed status and retirement over the past three years, this is an isolated instance of misconduct for which he accepts full responsibility, and his recognition that he should have thought more carefully and made sure that what he was doing was inside the legal confines of his position.
He has demonstrated contrition and recognises the betrayal of trust. He is willing to undertake intervention to address his offending behaviour but I do not see that any such arrangement is required in the circumstances. He is willing to undertake community service. He is with a low risk of re‑offending.
He has presented an exceptionally strong subjective case. There was a wealth of testimonials tendered speaking to his character, which I shall summarise.
Mr Hill, the Chairman of the Board of the company, wrote of the offender’s qualities and his surprise that the offender should be guilty of insider trading conduct, which was completely out of character which he has been able to assess over the many years that he has known the offender and during which he has come to trust him implicitly.

Mr Hall has known the offender through his entire tenure at Sirtex, he described him as always honest and effective, and to the extent that he was able to do so, he commented that this was inadvertent conduct completely out of his character.
Mr Montgomery wrote of knowing the offender for 20 years and as one of the most honest and ethical people that he has ever dealt with in his business career.
Mr James, a fund manager, spoke of him as honest, genuine and caring.
Mr Puttick, General Manager of a human resources outsourcing company, providing services to Sirtex, spoke of him behaving always with absolute honesty.
Ms Winslade wrote in similar terms and Mr Geddes in similar terms. Mr Smith, Chief Financial Officer, spoke of his integrity, high ethical standing. Mr Cade and Ms Winter, Mr Strautnieks all write in the most positive terms of the offender.
In addition, there are testimonials from members of his family and from others, and as noted in the submissions on his behalf.
Although good character has been said to be of diminished relevance in sentencing for white collar offences such as this, it is not be swept aside or overwhelmed in the exercise of the sentencing function. It is relevant to aspects of personal deterrence and rehabilitation and what will be adequate punishment.
The perception of all of these people carries with it the concurrent shame that the offender experiences by reason of his offending and the breach of trust that it involved, and the recognition of harm to the community, particularly those who might have been compelled or decided to trade their shareholdings in that period of time when the shares diminished, for which of course he cannot be held directly responsible, other than to the extent that he might have realised a return on his investment at the expense of others who bought in at that level.
He has been described as having been greatly affected by these proceedings, which I accept. One with the character and quality of personality as described would be troubled by the fact of the prosecution and the conviction that is likely to follow from it. I accept that there is a measure of public humiliation, his loss of employment, the loss of privilege in pursuing a career that he would have otherwise perhaps continued to enjoy, and there is the accompanying distress and anxiety referrable to the prosecution and the likely outcome.
There were submissions made with regard to delay. I have considered the material that has been tendered in respect of that. I am not satisfied that there has been such delay in this case as would impact significantly upon the outcome. However, I do include the overall time this prosecution has taken as part of the factual matrix upon which to assess the level of punishment to which the offender should be exposed. This does not carry any implication of criticism or blame to any or to either of the parties, or those who have been responsible for the presentation of the matter. These matters are notoriously complex. There are processes in the Commonwealth system where prosecutions brought by Federal government agencies and the Commonwealth Director of Public Prosecutions require protocols to be observed. There are, as described in this case, arrangements whereby the resolution of the matter could be short circuited, adopting efficiencies provided administratively, but they did not entirely bear fruit in this case. This has not in my view given rise to any significant impact.
This said, I accept that there is implicit stress and anxiety upon such as the offender, a person of otherwise blameless character who has enjoyed a good reputation until the prosecution of this matter, awaiting the outcome of the proceedings, and before then the commencement of prosecution, notice of the nature of the prosecution to be pursued and the ultimate outcome. I bring this to account.
There is also material before me with regard to the amount of cost that has been incurred by the appellant in the conduct of this matter due to those representing him. That is not a matter that I ought to bring to account in the assessment of the punishment in this case, but I do not overlook it when I consider the context of the stress and anxiety that the offender has experienced in the course of these proceedings. I make no comment upon the quantity of the costs that have been incurred by him, in his representation in these matters. I am not in a position to make any observation in that regard at all. It was a substantial sum, approximating $500,000. Anyone who is the subject of a prosecution can resort to whatever level of representation they might like to have, at whatever expense, but that is not a matter that a sentencing court should bring to bear as significant when determining punishment other than to the limited extent upon which I have observed.

Sentencing Principles

Each counsel helpfully provided submissions with regard to the relevant sentencing principles. I should observe before I refer to those propositions that there is an affidavit provided on behalf of the Crown from Lisa Koczberski, accompanied by an affidavit from the solicitor from the Director of Public Prosecutions responsible for carriage of the matter, Vasudha Sathanapally. The affidavit from the senior investigator provides a comprehensive chronology of the events which I need not rehearse in any greater detail than I have. As I have indicated, upon my assessment of it, this matter has followed the course one would have expected it to take over the timeline that has been specified, bearing in mind the nature of the proceedings and the offence and the complexity that is implicit in such a matter.
It is not be overlooked though, and this is not intended to impact upon my decision other than to bring it to bear with regard to the subjective case, that in November 2019 there was vacation of a sentence hearing date listed for 21 November 2019 in light of a recent diagnosis of a serious heart condition that required a surgical procedure that was in due course performed. I have brought that to account together with the offender’s age, as part of the material which has led me to the decision that he should be released forthwith notwithstanding the specification of the sentence that I will announce.
The submissions made on behalf of the Crown include the proposition that a typical insider trading offender uses inside information to gain an unfair advantage over other market participants. I would not find that to be so in this case. It is acknowledged that the fault element in this case is one of constructive rather than actual knowledge. The Crown has referred me to a number of authorities including R v Rivkin [2003] 198 ALR 400, where at para [44] Justice Whealy set out general principles of sentencing in respect of insider trading, emphasising the need for general deterrence. In this case, although I am not dealing with an offender who has had as his purpose advantage to be gained at the expense of the market, general deterrence still has a significant role to play to inform those in such positions of trust that they must attend to their obligations and be alert to what the law requires of them within this context.
I am also referred to R v Doff [2005] NSWCCA 119 and R v Pogson, Lapham and Martin [2012] NSWCCA 225 at [143]-[144], advising sentencing courts of their responsibility to ensure that the penalty imposed provides punishment, denunciation and a disincentive to others who might be tempted to disregard their obligations and need to attend properly to their duties.
The Crown notes, as did Mr Game SC, the significance of the quality or grade of the inside information and the extent to which it is relevant to the assessment of objective seriousness. Information regarding imminent market announcements is generally regarded as more serious, informing the degree of materiality, together with the size or volume of the impugned trades, and the quantum of profits realised or the loss avoided, and the breach of trust as other important matters that must be brought to account. Offending by a true insider with greater access to confidential information or a person in the position of seniority represents a more serious abuse. All of those matters are relevant to the assessment in this case, but bearing in mind that I am dealing with a person who is negligent in his attention to duties rather than reckless or intentional, or conducting himself with actual knowledge within the terms of the provisions.
I am reminded of the High Court decision R v Olbrich (1999) 119 CLR 270 with regard to the onus of standard of proof upon matters adverse to the offender and those upon which the offender might rely.
I am reminded of the discussions with the reference to the volume weighted average price and the loss in excess of $1 million avoided by the trade at the time it was conducted.
The submissions by the Crown at p 7 provide the corrected figures upon the submissions that the Crown makes. The Crown correctly points, in my view, to the sharp fall in share price immediately following the market announcement as a reflection of the materiality of the inside information in this case, which I find is consistent with the concerns expressed by the offender attributed to him in the statement of agreed facts also consistent with the response in the market to which I have referred.
The Crown submitted that the price of the shares two years’ later prior to the company being taken over was of no relevance, and that there was relative volatility in the share price at and about this time of after this sequence of events. As I noted, Mr Game submitted that the December date was not the point at which one assesses the materiality of the misconduct. My view is that all of the events that followed, and the volatility in the price, both downward and upward, are matters that I need to bring to account in assessing the objective gravity of the misconduct upon which the offender engaged.
The principles for sentencing offenders against Federal law articulated in these submissions resonate in large measure with what has been said on behalf of the offender. I am reminded that Part 1B Crimes Act 1914 must be applied, and that s 16A found within provides a non‑exhaustive list of factors to be brought to account.
There is the need to impose a sentence which is of an appropriate severity in the circumstances. Subsection (2) provides the checklist of matters that are to be included in consideration and the Crown has helpfully then provided an analysis of the relevant paragraphs and their application to the facts of this case, consistent if I might say with the approach taken by Mr Game SC and his junior.
With regard to the nature and circumstances of the offence: s 16A(2)(a) it is said that the seriousness of the offences is informed by the senior position of the offender within the company, that there was a breach of trust, that he was privy to important sensitive information, that he was thus a true insider, he was an experienced corporate leader who approved of the company’s security trading policy and reviewed the company’s code of conduct, and there was in the circumstances a substantial failure in his obligations to comply, generally and in respect of the prohibition on trading while in possession of inside information. The Crown submits that this was highly material information because it provided insight into the performance of the company and was acquired from multiple sources from different global regions over a significant period of time, and there was a sharp decline in the share price when the revised and downgraded performance figures were reported, all of which I accept.
At the same time, it is to be noted that I am dealing with an offender who was negligent and therefore less culpable than an offender who might have had actual knowledge and intention. He made no attempt to conceal the transaction that took place. In fact he took steps to inform the market of the sale of the shares and when the market responded he took steps to publish a further message to explain why he acted as he did. There is one transaction, not a series of transactions. All of these matters are to be balanced against the other items pointing to the seriousness of the offending to which the Crown has pointed.
The Crown took me to s 16A(2)(e) and the question of injury, loss and damage. The issue in this context is the impact upon the market caused by the insider trading and the loss of confidence that can attach as a result. The Crown referred to the immediate response by shareholders who raised their concerns.
I am reminded of s16A(2)(f) and the extent to which he is prepared to make reparation; as I have already described, he has money quarantined.
He pleaded guilty at an early opportunity. I must look upon the application of s 16A(2)(g). That is to be brought to account, both with regard to his contrition and remorse, and as is often said in Federal offences, his facilitation of the judicial process, and the discount of 25% for the utility that is now appropriate as a consequence of recent authority in the Court of Criminal Appeal.
Specific deterrence, the Crown concedes would have little play in this exercise in light of his past character and the low risk of re‑offending, s 16A(2)(j). General deterrence as I have noted, is a matter of relevant consideration, s 16A(2)(ja). Adequate punishment is required in accordance with s 16A(2)(k). I have had regard to his character, antecedents, age and his physical ailment that required the surgical intervention to which I referred.
He was 69 years of age at the time of the sentence hearing and will turn 70 later this year; he was 65 at the time of the offence. His retirement has limited the impact of the extra-curial punishment by way of automatic disqualification by ASIC from service as a Director. As a consequence of this conviction he is proscribed for a period of five years.
The Crown has made submissions upon delay to which I have already referred and I have expressed my view with regard to that. I accept the Crown’s proposition that there was no significant delay in the prosecution of the matter. I am reminded by the Crown of the sentencing options available. I accept that the line so‑called in s 17A Crimes Act has been crossed. I am not to pass a sentence of imprisonment in respect of the offender unless having considered all other available options and I am satisfied that no other sentence is appropriate in the circumstances.
The offending and the attendant facts and circumstances synthesised with the strong subjective case have together still left me with the view that there must be a sentence of imprisonment specified in this case. However I propose to order a recognizance release order in respect of which the offender can be released forthwith upon entering into the agreement and I will make an order in those terms.
I do not propose to include any further penalties in the orders. I do not intend to impose a fine in addition to the sentence of imprisonment and the recognisance release order. I am aware that he has some assets available to him for his retirement but I do not see that it is appropriate in the circumstances to add to his burden by requiring him to meet a fine or pecuniary penalty in addition to the order I am about to make.

The Psychological Assessment

There is a psychologist’s report provided by LSC Psychology written by Sarah Brann. I have had regard to the life history described in that document, his education and employment, the work that he was doing with this company which he described as his dream job, and the satisfaction he derived from being involved in an enterprise whereby a cancer treatment technology was developed and made available to the community. He was not motivated by money in his pursuit of his role.
He suffers from an autoimmune disorder known as Grave’s disease which is managed through thyroid medication. He suffers hypertension and he has cholesterol and blood pressure medication that he must take.
He was married in 1979 and has one son. The marriage failed in 2005 but he is now with a partner of some 13 years. He is in a happy and fulfilling relationship. His partner is a survivor of cancer which was another aspect of the value the work he was performing had and his purpose engaging in it. Significantly he did not trade or have shares outside of what were given to him by his company in the course of his employment.
This report deals with the ongoing arrangement whereby he directed sales of the shares to meet his estimated tax liability from time to time.
The offender did not give evidence before me but the report from the psychologist was tendered without objection and the basis upon which the plea was accepted is consistent with what is attributed to him. Notwithstanding the circumspection required, in the circumstances, applying what was said by Acting Justice Smart in R v Qutami [2001] NSWCCA 353 I accept what is attributed to him in the document.
He completed psychometric questionnaires for depression and anxiety. He demonstrated symptoms for depression within the severe range and moderate for anxiety and stress. A personality assessment inventory was completed. That is consistent with psychological symptoms of depression. There are no risks of self-harm or suicidal ideation but it is suggested that he has been experiencing significant stress and impairment in social and personal functioning, not linked to any pre‑existing disorder, no doubt consistent with the stress and anxiety he has experienced in the course of the investigation and his subsequent prosecution.
Unsurprisingly, he is said to be someone with a high degree of self‑efficacy, struggling to cope with the lack of control experienced in his current situation.
The balance of the material includes comparative sentences, case references, and the affidavit of Ms Hodgman who appears with the appellant today, setting out his financial circumstances including the cost of these proceedings to which I have referred. This affidavit provided by her also includes a table of the occasions when there was interaction between the Crown and on behalf of the offender, and alluding to what would result from this case.
I do not believe there is any need for me to refer further to the material. I have reached the point where I am satisfied I can determine the matter.

The Sentence

The offender must bear the ignominy of a conviction in this case and accordingly I convict him of the offence to which he pleaded guilty upon arraignment before me. I am satisfied that there must be a sentence of imprisonment identified and accordingly I impose a term of imprisonment of 1 year and 6 months against the maximum penalty that applied at the time of the offence of imprisonment for ten years. Pursuant to s 20(1)(b) Crimes Act 1914 I order the immediate release of the offender conditionally upon him entering into a recognizance himself in the sum of $10,000 to be of good behaviour for three years. He should understand that if he fails to comply with this recognizance he will be returned to court and will face the prospect of forfeiting the sum of $10,000 and of being taken into custody to serve the sentence which I have specified.
I shall leave the parties with liberty to apply if there is to be an order sought by the Australian Federal Police.
I will order that my judgement be provided so I can publish it on Caselaw. I will also make sure that the exhibits are retained on the court file for such use that the parties might need to make of them in due course.

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Endnote

Decision last updated: 23 July 2020

Medium Neutral Citation:	R v Wong [2020] NSWDC 382
Hearing dates:	15 May 2020
Date of orders:	04 June 2020
Decision date:	04 June 2020
Jurisdiction:	Criminal
Before:	Bennett SC DCJ
Decision:	Term of imprisonment of 1 year 6 months but, pursuant to s 20(1)(b) Crimes Act 1914, order his immediate release conditionally upon entering a recognizance in himself of an amount of $10,000, to be of good behaviour for 3 years
Catchwords:	SENTENCING — Federal offenders — Relevant considerations — Sentence by State court for offence against Commonwealth law — Insider trading SENTENCING — Mitigating factors — No record of previous convictions — Plea of guilty — Remorse — Unlikely to re-offend SENTENCING — Penalties — Recognizance SENTENCING — Relevant factors on sentence — Maximum penalty — Objective seriousness SENTENCING — Sentencing procedure — Agreed facts SENTENCING — Subjective considerations on sentence — Age of offender
Legislation Cited:	Corporations Act2001(Cth) Crime Act 2002 (Cth) Crimes Act1914 (Cth) Criminal Code Act 1995 (Cth)
Cases Cited:	RvDoff [2005] NSWCCA 119 R v Olbrich (1999) 119 CLR 270 RvPogson, Lapham and Martin [2012] NSWCCA 225 R v Qutami [2001] NSWCCA 353 R v Rivkin [2003] 198 ALR 400
Category:	Sentence
Parties:	Regina (Crown) Gilman Edwin Wong (Offender)
Representation:	Simon Buchen SC (Senior counsel for the Commonwealth Crown) Rose Khalilizadeh (Junior counsel for the Commonwealth Crown) Tim Game SC (Senior counsel for the Offender) Julia Roy (Junior counsel for the Offender) Commonwealth Director of Public Prosecutions (Crown) Dentons (Offender)
File Number(s):	2018/260942