Date of Judgment: 11 September 2020
Court: District Court of NSW (M King DCJ)
Partner Agency: Australian Securities and Investments Commission (ASIC)
Summary of charges: On 25 February 2020, Michael Ming Jinn Ho pleaded guilty to six charges of prohibited conduct engaged in by a person in possession of inside information contrary to s1311(1) with ss1043A(1) and (2) of the Corporations Act 2001 (Cth) (the Corporations Act).
Synopsis: Between 18 July 2016 and 10 February 2018, Michael Ming Jinn Ho traded in the shares and options of Big Un Limited (Big Un) while in possession of inside information and on 14 October 2016 he communicated inside information to an associate.
During the offending period, Michael Ho used three different brokers and seven different trading accounts to acquire securities and procure the acquisition of securities, with a total investment of approximately $1.6 million.
The investigation of Michael Ho’s conduct commenced on 12 March 2018, after he voluntarily reported his involvement in insider trading to ASIC.
The matter was subsequently referred to the CDPP for assessment of a pre-brief plea proposal which involved consideration of a detailed draft Statement of Facts, related documentation and the appropriate charges.
Sentencing: On 11 September 2020, Michael was formally convicted of each offence and sentenced to an aggregate term of three years’ imprisonment, to be served by way of an intensive correction order. In addition to the standard conditions, his Honour imposed a community service work condition of 250 hours.
This sentence was imposed after his Honour decided it was appropriate that Michael Ho should receive a 50 per cent discount of his sentence comprised as follows: 25 per cent for his plea of guilty (reflective of the utilitarian benefit of the plea and his facilitation of the course of justice); 12.5 per cent for his past assistance (reflective of his assistance to the authorities to date and his entitlement to the ‘Ellis discount’); and 12.5 per cent for his undertaking to provide future assistance.
His Honour indicated that, but for the aggregate sentence, the separate sentences he would have imposed in respect of each offence (after taking into account the discount outlined above) are as follows:
- Charge 1 – 12 months’ imprisonment.
- Charge 2 – 6 months’ imprisonment.
- Charge 3 – 12 months’ imprisonment.
- Charge 4 – 6 months’ imprisonment.
- Charge 5 – 10 months’ imprisonment.
- Charge 6 – 18 months’ imprisonment.
Notable Remarks: During the sentence judgment, his Honour M King DCJ made remarks on sentence to the following effect:
- The objective seriousness of the offending – Insider Trading and ‘Tipping’ offences are serious offences as they undermine confidence in the financial markets. The conduct has been characterised as cheating or fraud and accordingly general deterrence is always important in relation to this type of offending. Offending of this nature is difficult to detect and requires a high degree of skill on the part of the authorities to both detect it and obtain evidence of the nature required for a prosecution… It is clear that the legislature takes a dim view of this type of offending which can be inferred from the increase in the penalties from five to 10 years’ imprisonment… It is never possible to determine the extent to which an offender damages the share market, but conduct of this nature undermines confidence in the share market and must have an adverse effect.
- The offender’s conduct – The offences were not particularly sophisticated and were opportunistic, the offender having taken advantage of information when it became available from time to time. There was no breach of his relationship with his employer. His Honour noted that the offender had decided to invest in the company prior to his offending, which contributed to his ongoing interest in it. The offender’s conduct involved significant buying and selling of shares and options, although at the end of the day he and his family were left holding an empty bag of valueless securities.
- The offender’s prospects of rehabilitation – The offender has very high prospects of rehabilitation. The voluntary disclosure of his offending and his offer of assistance indicated that he had already started to rehabilitate himself.
- The offender’s assistance to authorities – After reviewing the evidence of the offender’s assistance, his Honour was of the view that in the absence of the offender having come forward, it was unlikely that ASIC would have ever discovered his offending. Although his trading activities would have been known, it is highly unlikely that ASIC would have been in a position to prosecute him. Accordingly, the offender was entitled to what is known as the ‘Ellis Discount’. The assistance the offender provided could not have been more complete and his undertaking to assist in the future is of high value. Offending of this nature is frequently not capable of discovery and those involved are usually not interested in disclosing their involvement in it.
Relevant links: See the ASIC media release on ASIC’s website.