A Queensland man is said to have profited $343,000 by using inside information.
In a statement on Monday, ASIC confirmed that Jin Xi Li of Caloundra in Queensland has been sentenced to nine months imprisonment for insider trading.
The corporate regulator said that Mr Li had traded in contracts for difference (CFDs) of PanAust while he was in possession of inside information regarding a takeover bid for the company by Guangdong Rising H.K (Holding) Limited (GRAM), making a profit of $343,000.
GRAM had previously made a takeover bid for PanAust in April 2014 which did not eventuate. Mr Li then contacted an acquaintance in China less than a year later to assist him to determine whether it was possible GRAM would make another takeover bid for the company.
This contact confirmed that loan documents were being prepared for GRAM to obtain finance for another takeover bid and also later confirmed a contract would be signed.
Before PanAust made an official announcement regarding the takeover bid on 30 March 2015, ASIC said that Mr Li acquired 390,000 PanAust CFDs between 19 March and 26 March and procured his wife to acquire 265,000 PanAust CFDs between 22 March and 26 March.
During sentencing, Judge Rinaudo said that Mr Li “took an unfair advantage when trading, and having regard to the principles of general and specific deterrence, a term of imprisonment is the appropriate sentence.”
The court ordered that Mr Li be released on recognisance upon the condition that he be of good behaviour for a period of two years. Mr Li had pleaded guilty to the two charges of insider trading earlier this year.
“This outcome demonstrates the criminal consequences that come from using inside information to trade on Australia’s financial markets,” commented ASIC deputy chair Sarah Court.
“Investigating and pursuing insider trading is an enduring priority for ASIC to ensure our markets are strong and fair.”
Jon Bragg is a journalist for Momentum Media's Investor Daily, nestegg and ifa. He enjoys writing about a wide variety of financial topics and issues and exploring the many implications they have on all aspects of life.