Commonwealth Director of Public Prosecutions

Market manipulation leads to 12 month sentence released forthwith

Year: 
2020-2021
Category: 
Commercial, Financial and Corruption
Location: 
Western Australia

Date of Judgment: 9 February 2021

Court: Supreme Court of Western Australia

Partner Agency: Australian Securities and Investments Commission (ASIC)

Summary of charges:

On 27 August 2020 Ananda Kathiravelu pleaded guilty to an offence of Conspiracy to commit market manipulation contrary to sections 1041A and 1311(1) of the Corporations Act 2001 (Cth) and 11.5(1) of the Criminal Code (Cth). As alleged in the indictment:

Between 12 May 2016 and 17 May 2016, at Perth in the State of Western Australia and elsewhere, Ananda Kathiravelu conspired with Ariel Malik to take part in, or carry out, whether directly or indirectly, a transaction or two or more transactions, namely the purchase of Radar Iron Ltd shares, which had or were likely to have the effect of creating an artificial price, or maintaining at a level that is an artificial price, for trading in financial products on a financial market operated in this jurisdiction, namely the price for shares in Radar Iron Ltd, contrary to sections 1041A and 1311(1) of the Corporations Act 2001 (Cth) and 11.5(1) of the Criminal Code (Cth).

Section 11.5(1) of the Criminal Code (Cth) provides that an offence of conspiracy is punishable as if the offence, to which the conspiracy relates, had been committed. At the time of this offending the maximum penalty for contravening section 1041A of the Corporations Act 2001 (Cth) was 10 years’ imprisonment and/or a fine of up to $810,000.

Synopsis:

Mr Kathiravelu was undertaking capital raising for a listed company (Radar Iron Ltd) and conspired with a business associate to ensure that on the day before the company went into a trading halt, shares on the ASX would close at a price above the price to be offered under the capital raising.

The conspiracy was constituted by eight WhatsApp messages sent over the course of about 14 minutes. The offence resulted in three separate orders being placed in a ten minute period for the purchase of Radar shares. The conspirators increased the share price from 5.0 cents per share to 5.1 cents which fell short of their goal of 5.2 cents.

Key points:

While cases of this type often result in the Crown submitting that the appropriate sentence is a term of imprisonment with time to serve, in this case, by reason of all of the circumstances when considered in combination, but in particular the plea of guilty, the Crown submitted that it was open to the Court for Mr Kathiravelu to be sentenced to a term of imprisonment but to be released forthwith upon entering into a recognisance in a sum to be determined by the Court, to be of good behaviour for a period to be determined by the Court – pursuant to section 20(1)(b) of the Crimes Act 1914 (Cth).

Sentencing:

On 9 February 2021 his Honour Justice Derrick sentenced Mr Kathiravelu to 12 months’ imprisonment to be released forthwith. In his judgment his Honour gave consideration to a range of factors including releasing the offender immediately.

“I have given the issue of whether you should be released forthwith upon giving security careful consideration. Ultimately I have come to the conclusion that the Crown’s concession is correctly made and that you should not be required to actually serve a portion of your sentence in prison, and that you should be released forthwith upon you entering into a recognisance in the sum of $10,000 for a period of seven months from the date of release with the condition that you be of good behavior during the period of the recognisance.

“In my view the imposition of the 12 month term of imprisonment accompanied by an order that you be released forthwith upon giving security in the form of a recognisance is the sentence that meets all of the relevant sentencing considerations to which I have referred, and is consequently the sentence that is of a severity appropriate in all of the circumstances of your offence.”

Relevant links:

ASIC media release – 10 February 2021