Law Case Brief: Insider Trading Analysis

This document presents a detailed case study on insider trading, focusing on the R v Curtis case. It delves into the specifics of the case, including the charges, evidence, and the court's judgment. The analysis covers relevant sections of the Corporations Act 2001 and the Crimes Act 1994, highlighting the legal framework surrounding insider trading. The document also discusses the concept of insider trading, its legal and illegal forms, and its impact on the market. Furthermore, it includes examples of other notable insider trading cases and the importance of insider trading policies in organizations. The case study concludes with a summary of the key findings and a list of references.

Law case brief

Table of Contents
INTRODUCTION...........................................................................................................................3
TASK.1............................................................................................................................................3
TASK.2............................................................................................................................................3
TASK.3............................................................................................................................................4
TASK.4............................................................................................................................................5
TASK.5............................................................................................................................................5
CONCLUSION................................................................................................................................7
REFERENCES................................................................................................................................8

Insider Trading
It is kind of offence which is done by the existing employees through publicized some
valuable information of company. These are mostly dealing with the company securities which
are not available to general public. Insider trading is the practice which is both of the types, legal
or illegal. The legal are not detrimental to the company and outsiders as well, but illegal insider
trading means unpublished price sensitive information which is so sensitive and possessor of
such information trades and gain the profits on behalf of such information. Insider trading
becomes illegal if the material information is unpublished and trades on behalf of such
information. Trading having the information about the special knowledge is not fair to the other
investors who is not having the unpublished information. Under the given case, it has been seen
that Mr. Curtis had been found guilty of an offence of insider trading within which the jury of the
supreme court sentenced Mr. Curtis imprisoned for two years.
R v Curtis (No 3) [2016] NSWSC 866
According to Corporations Act, 2001, it was notices that Mr Curtis was found guilty and
imposed several charges of conspiracy to commit insider trading as per mentioned act.
In supreme court order with his jury found Curtis guilty in doing fraud as insider trading and on
the basis of this he ordered two year of imprisonment from 24th June 2016 to 23rd June 2018. it
has been found that the insider trading does have the strict or heavy penalties but still many of
the people trades on the basis of unpublished price sensitive information and makes the profits
on the basis of such information. Under the given case, it has been seen that the Mr. Curtis was
found two years imprisonments after disclosing the insider trading scam.
According to section 103A(1)(d) of the corporation Act specified that the individual who
have the unpublished price sensitive information and also who knows that specified matters are
satisfied with regards to the information 1. He need not procure other individual to apply for,
acquire or dispose off, concerned division 3 financial products. The particular matter which the
individual(insider) is required to know are satisfied with regards to the information are that:
 Information is not normally available; and
 In that case, if the information is generally available, a reasonable person will expect it to
have a material effect on the price or value of particular division 3 specified division.
1 Acharya, V.V and Johnson, T.C., (2010). More insiders, more insider trading: Evidence
from private-equity buyouts. Journal of Financial Economics. 98(3). pp.500-523.

Mr. Curtis was charged with the offence of insider trading and he was penalised for two
year imprisonment. Although he was having the unpublished price sensitive information which
was not to be disclosed till it goes published. But, he traded and make the profits on behalf of
such information. After knowing such insider trading information, he was found guilty.
The supreme court which is headed by the McCallam J and the regarded jury discovered
Mr. Curtis guilty of an offense of insider trading as per section 1043A(1)(d) and other significant
sections of the Corporation Act and the detainment was currently to be required for insider
trading (Kim, 2012).
The Crimes Act, 1994 emphasis that the court need to impose a strict final judgement,
which is proper in all the circumstances of the offence. In case of conspiracy, the concerned
offence is the agreement which incorporates the conspiracy. Although, Subsequent to having the
nature and circumstances of the cited offense covering reviewing the substance, time period and
truly of conspiracy covering Mr. Curtis' part in its succeeding uses and having respects to whole
conditions of the offense, the supreme court judges concluded that the objective seriousness of
the offence was on the peak. After getting the conclusion, respected judge campaign accepted
evidences which are related to the case. These are:
Mr Curtis and Hartman both are interacting with each other by using blackberry mobile
phone, which fully encrypted and having secure communication system.
Mr. Curtis was had proposed correspondence by sticking and had brought blackberry as
he trusted their correspondence by that implies would be imperceptible. In addition, Mr. Curtis
was given funding to begin the exchanging.
In spite of the fact that Mr Hartman, strengthened the guilt among parties to commit
offence of insider trading. In may,2007 a huge margin of 1433727.85 was made a outcome of
messages that was send from Mr Hartman from its device under which trading guidance was
given to Mr Oliver who are acting on it and involve in 45 illegal transaction.
The base of the connivance was that Mr. Curtis bring out 45 trades over a time of 14
months on guidelines he accepted to be relies on upon inside data 2. While he won't not have
known deliberately why the trading was so gainful, the reality was that it was beneficial, with the
two men making a net benefit around $1.43 Million. As per available evidence provided to ASIC
under section 19 of the act it should not be used as evidence by prosecutors.
2 Agrawal, A and Cooper, T., 2015. Insider trading before accounting scandals. Journal
of Corporate Finance. 34. pp.169-190.

Conspiracy means a secret plan which is made by a group to do something unlawful. In
this scenario Curtis has done an offensive act to leak the information of the company. Under
section 2043a of The Act, act of conspiracy is considered as a crime and the person who does
this act, is punishable under the Act. As the information violated by the person is very private
and can't be leaked. As it can damage and affect the business3. Curtis is under custody because
he has violated the insider trading rules by leaking the information to the general public (Denis
and Xu, 2013). The person can get sued under this act and can be taken as victim to conduct a
crime. Every business have some private information which is not supposed to be leaked and in
this case it is been violated by Curtis which an offensive crime so he is been taken under the
bars.
The company have complete right to make it information private in share market because
it is very sensitive and leakage of it can cause huge loss to the outsiders and huge gain to the
company. So the company is suing Curtis for his unfair trade practise4. A person is accountable
when he/she works in the company and the information that is shared by the company should be
kept with itself. Curtis have illegal insider trading practices, which will create a problem for him
as he is under the bars. The court and the law of the country will give him the punishment
accordingly.
It can be said that when the persons who are related to the company such as employees
who are able to easily access the information in relation to the strategic matters and then they use
such information for the purpose of trading in the securities and stocks of company, than this
process will be called as insider trading. Insider trading can be divided into two parts which will
be illegal and legal insider trading. Securities and exchange board of India has highly
discouraged this activity as it wants the benefit of common investors which can be achieved by
the fair trading in the market5. There are various cases that had happened in relation to insider
trading. Some of them are like in case of ImClone – IMCL which is a publicly traded
3 Agrawal, A and Nasser, T., (2012). Insider trading in takeover targets. Journal of
Corporate Finance. 18(3). pp.598-625.
4 Bach, D and Newman, A.L., (2010). Transgovernmental networks and domestic policy
convergence: Evidence from insider trading regulation. International Organization.
64(03).pp.505-528.
5 Bodie, Z., (2013). Investments. McGraw-Hill.

biotechnology company which is engaged in marketing of the products in the field of oncology.
It was found that founder and CEO of the company were involved in insider trading and were
indicted for it. After them in some time Martha Stewart was also found to be involved in insider
trading. Waksal was trying to dump shares of $5 million of his company in the company of
Stewart and on getting this information from her broker Stewart sold her shares.
Due to this activity they were charged for insider trading and sentenced to imprisonment.
Another case in this relation is of SEC v. Compania international financier S.A in which it was
alleged by SEC that CFDs were purchased by the investors on the basis of the non public
information that was material which was received by it in relation to acquisition of publicly
traded chemical company6. In this case it was concluded by court that CFDs were securities as
broker has purchased the same share in the US market and it was purchased before pricing of the
CFD and due to this influence reflected on the market price will also be reflected in CFDs price.
Therefore any loss to the CFD holders will be similar to those of the common stock holders and
all this was insider trading.
The concept of the inside training define the what is the concept to the company and
identifying the company position in this organisation. This is create the communication planing
to developing the company performances. The concept of the New south Wales in Rv curits
create the legal consideration in the court judgement. This trading based on the insider
information in legally performances. This case is claim that legally inside and rising the cost of
the capital for the security issuers and create the best legal performance. The trading in the
insider create the employees communication skills and develop the company product
performance in the organisation7. The responsibility of the investigate create the many legal
consideration. There are many issue related to the trading and non public issue in the case of the
united kingdom. The corporate insider create the legal obligation and take the price of the
market share. This is also define the liability of the people this is create the proof of the
responsibility and informing the illegal insider trading. The person usually regarding the the
merger and accusation relate to the held of the higher stander.
6 Bozanic, Z., Dirsmith, M.W and Huddart, S., (2012). The social constitution of
regulation: The endogenization of insider trading laws. Accounting, Organizations and
Society. 37(7). pp.461-481.
7 Denis, D.J and Xu, J., (2013). Insider trading restrictions and top executive
compensation. Journal of Accounting and Economics.56(1). pp.91-112.

The reason why Mr Curtis was being only 2 years of imprisonment,because the offences
had done in between 2007 and 2008 that was before new corporations regime that was
established by parliament in 2010. under which it was changed the maximum year of
imprisonment up to 5 to 10 years with appropriate fine ranges from 220000 to 490000 or three
time of the amount. It is wrong decision of the court and create the many illegally judgement.
This is also take the share of the company and the many process of the management control in
the organisation8. There are many scope to identify the share holder performance. Purpose of
insider trading policy
 The insider trading policy is very helpful for the protection of the informations and the
data related to the organisation.
 The main objective of the policy is to impose the restrictions upon the employees of the
organisation so that the insider trading act can be reduced9.
 It helps the organisation to produce the defensive act which will aid in the controlling the
liabilities of the person.
 It helps in the promotion of the organisations interest in the maintaining of the reputation
of the firm. The status of the organisation will be protected with the help of the insider
trading policy10.
 This policy also helps in the education of the employees related to the insider trading, so
that the awareness related to the policy can be created among all.
 The policy guides the organisation to protect the database that carries all the related
information of the policies, plans and the strategies that the firm is adapting.
8 Jiang, X and Zaman, M.A., 2010. Aggregate insider trading: Contrarian beliefs or
superior information?. Journal of Banking & Finance.34(6). pp.1225-1236.
9 Nagy, D.M., 2011. Insider trading, congressional officials, and duties of entrustment.
BUL Rev..91. p.1105.
10 Nagy, D.M., 2011. Insider trading, congressional officials, and duties of entrustment.
BUL Rev..91. p.1105.

 The policy's basic purpose is to resist itself from the external affecting factors as well as
the employees who perform fraudulent act within the organisation11.
 It will clearly defines the rules and regulations that has to be very strictly followed by the
firm and its management so that the insider trading can not be performed by any of the
employees of the organisation12.
After the introduction of new changes in insider trading which was implemented by court
has inflicted hashed penalties.
R v Xiao [2016] NSWSC 240
Steven xiao the managing director of Han long mining which is situated in china has received the
most longest penalties regarding insider trading in Australian history that was 8 year and 3
months. It was given in behalf of doing 102 illegal trades in mining companies which was
generating more than1.7 million profit every year.
CDPP v Hill and Kamay [2015] VSC 86
under this case we have noticed that lukas kamay who was a NAB trader were sent to 7
year of imprisonment after conducting trade which is associated to insider trading which he
received from his friend by Australian bureau of statistics. He was found that her objective was to
deter younger people in corporate world to commit these type of crime which is a huge office that
they even know that kind of activities.
It has been found that ASIC has acquired major responsibility in market overlook in 2009. the
prosecutions has shown more than 39 case related with insider trading which is forwarded as
investigating by ASIC as 80% rate of success. In lack of evidences is has been found that issues
of proof while conducting other investigation. There are more than unjustified questions that are
11 Peress, J., (2010). Product market competition, insider trading, and stock market
efficiency.The Journal of Finance.65(1). pp.1-43.
12 Prentice, R.A and Donelson, D.C., 2010. Insider Trading as a Signaling
Device.American Business Law Journal.47(1). pp.1-73.

based on individual offender is sentenced as imprisonment , which is mostly the actual term of
imprisonment that are fully suspended.
CONCLUSION
From the cited case, it has been seen that the there is a strong law over the insider trading,
still offences is been committed over this part. The Insider trading is the buying or selling of
security by someone who have the unpublished price sensitive information. This could be illegal
or legal which is mainly based on the insider makes the trade.

REFERENCES
Books and journals
Acharya, V.V and Johnson, T.C., 2010. More insiders, more insider trading: Evidence from
private-equity buyouts. Journal of Financial Economics. 98(3). pp.500-523.13
Agrawal, A and Cooper, T., 2015. Insider trading before accounting scandals. Journal of
Corporate Finance. 34. pp.169-190.
14Agrawal, A and Nasser, T., 2012. Insider trading in takeover targets. Journal of Corporate
Finance. 18(3). pp.598-625.
Bach, D and Newman, A.L., 2010. Transgovernmental networks and domestic policy
convergence: Evidence from insider trading regulation. International Organization.
64(03).pp.505-528.
Bodie, Z., 2013. Investments. McGraw-Hill.
Bozanic, Z., Dirsmith, M.W and Huddart, S., 2012. The social constitution of regulation: The
endogenization of insider trading laws. Accounting, Organizations and Society. 37(7).
pp.461-481.
Denis, D.J and Xu, J., 2013. Insider trading restrictions and top executive compensation. Journal
of Accounting and Economics.56(1). pp.91-112.
Jiang, X and Zaman, M.A., 2010. Aggregate insider trading: Contrarian beliefs or superior
information?. Journal of Banking & Finance.34(6). pp.1225-1236.
Kim, S.H., 2012. The Last Temptation of Congress: Legislator Insider Trading and the Fiduciary
Norm Against Corruption. Cornell L. Rev. 98. p.845.
McGee, R.W., 2010. Analyzing insider trading from the perspectives of utilitarian ethics and
rights theory. Journal of Business Ethics. 91(1). pp.65-82.
Nagy, D.M., 2011. Insider trading, congressional officials, and duties of entrustment. BUL
Rev..91. p.1105.
Peress, J., 2010. Product market competition, insider trading, and stock market efficiency. The
Journal of Finance.65(1). pp.1-43.
Prentice, R.A and Donelson, D.C., 2010. Insider Trading as a Signaling Device. American
Business Law Journal.47(1). pp.1-73.
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