Our list yesterday of the five people jailed by ASIC for insider trading over the past 15 years missed the most recent example. Richard James Frawley was last week sentenced to two and a half years of periodic detention on a charge of insider trading in JNA Telecommunications which was taken over by Lucent Technologies in 1998.

Frawley worked for one of Lucent’s competitors and heard that JNA was on the market. He made a profit of $586,000 but agreed to repay the money, as you can see from this ASIC press release. ASIC chairman Jeffrey Lucy was quoted sounding quite tough:

Mr Lucy said the sentence imposed on Mr Frawley illustrated the serious consequences for those who undermined the integrity and fairness of the stock market.

‘The stock market should be an equal playing field that is not open to interference by a select few, and ASIC will not tolerate people who disregard their responsibilities and use confidential information in a calculated way for personal gain,’ Mr Lucy said.

ASIC’s rhetoric was even tougher when former Harts Australasia finance director Max Sweetman was jailed for insider trading in December 2004, as you can see from this press release.

ASIC’s Executive Director of Enforcement, Ms Jan Redfern said the jailing of Mr Sweetman sent a message to the community that insider trading was a serious offence.

‘Mr Sweetman has engaged in a criminal activity that has undermined the fairness and integrity of the stock market. In order to maintain investor confidence in the market, ASIC will not hesitate to investigate and prosecute those suspected of insider trading,’ Ms Redfern said.

‘Investors have the right to expect fair dealing and proper disclosure in stock market transactions and ASIC will continue to pursue those who compromise these expectations and disregard the law. ASIC will always seek to make the market fairer for investors,’ Ms Redfern added.

CRIKEY: ASIC certainly has hesitated in the case of Steve Vizard as it hasn’t even tried to get an insider trading prosecution up when arguably the clearest cut and most serious example emerged.

Peter Fray

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