If ASIC (and the
DPP) hadn’t blundered enough by failing to bring criminal charges
against Vizard, they topped it off by a staggering performance in the
Federal Court. The statement of agreed facts between Vizard and ASIC
informed everyone what Vizard did. His actions, which he admitted to,
were a very serious criminal offence. The only reason he wasn’t charged
criminally is that for some reason, the DPP and ASIC failed to read an
evidence law textbook or were outwitted by the likes of Richter and
Zwier.

That said, given that ASIC has been publicly humiliated
in failing to charge Vizard with a criminal offence, you’d think ASIC
would at least have a crack at the maximum possible civil penalty.
Instead, ASIC has recommended a fine of a mere $130,000 per offence –
far less than the $600,000 maximum – and a mere five-year ban from
directorships.

Neil Young outlined two of ASIC’s reasons for
not seeking the maximum penalty to the Federal Court – each reason
provided by ASIC is wrong in a legal and perhaps more importantly, a
moral sense.

1. Vizard’s Apparent Contrition

Neil
Young noted that “Mr Vizard deserves credit for (his contrition, and it
would) merit a substantial reduction (in his sentence).” However,
Vizard wasn’t overly contrite. He:

  • Spent five years fighting ASIC’s charges.
  • Hired a massive legal team to try to avoid any penalty.
  • Did not apologise for his actions until well after he was charged by ASIC.
  • Did not turn himself in, but was rather dobbed in by his allegedly crooked former bookkeeper.
  • Entered into a sweetheart deal with regulators because his corrupt accountant refused to testify.

These
are not the actions of a man who is “contrite.” Rather, they are the
actions of a man who did everything in his power to avoid the correct
penalty for his clearly criminal actions and merely apologised in order
to reduce his penalty. As the cliché goes, Vizard was not sorry about
what he did, he was sorry about getting caught.

2. Vizard had already suffered because of his diminished reputation

Clearly
this is one that you won’t find in the criminal law textbooks. Vizard’s
reputation was damaged because he committed a crime, concealed it, then
arranged a sweetheart deal to avoid criminal sanctions. His public
position is not a mitigating factor – if anything, the fact that Vizard
was in such a public position may have even added to his penalty.

If
Vizard had committed armed robbery, presumably his reputation would
also have been tarnished. However, one would doubt whether the Supreme
Court would take that into consideration in determining a reduced
penalty – why is the situation different for a “white collar” crime?

If
a tarnished reputation is grounds for a reduced penalty – ASIC is
effectively conceding that if you are rich and famous, you will get a
lesser penalty than if you are an average battler. That is because an
average battler would not be able to rely on the “tarnished reputation”
defence in order to have his or her penalty reduced.

While ASIC,
as a regulator, does not set a precedent in a case like Vizard’s (as a
court would) – it would reek of favouritism if ASIC adopted one stance
for celebrity crooks like Vizard and another stance for your unknown
insider trader. If ASIC has set an unofficial precedent, it would mean
that any investment banker or lawyer acting on a deal who uses
information to insider trade (but does so by getting a mate to set up a
company and undertake the trades on their behalf) should receive the
same light penalty that Vizard looks like getting.

Therefore,
ASIC has effectively declared that it’s open season for insider
trading. So long as the insider gets someone else to undertake the
trades for them and that the other person refuses to testify, the worst
that can happen is a small fine and a ban from being a company
director.

Further, like the Fares brothers (from NAB) and
Vizard (who made a paper profit of $150,000 on his dodgy trades before
stupidly not selling all his share during the boom) showed – there are
some very, very handsome profits to be made from insider trading
information and the risk of penalty is very, very low.

Peter Fray

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