ASIC has finally claimed a scalp for its insider-trading mantelpiece. While no Steve Vizard, the jailing of John Joseph Hartman for 4½ years represents a rare victory for Australia’s corporate watchdog. The 25-year-old son of wealthy Sydney obstetrician Keith Hartman has made profits of almost $2 million after “front-running” shares being acquired for clients of his employer, fund manager Orion Asset Management. Hartman had pleaded guilty to 25 counts of insider trading earlier in the year and was sentenced last week.

The ill-gotten profits had been used on Las Vegas holidays and luxury motor vehicles. Like most insider traders, Hartman also appeared to pass information to associates — ASIC is understood to have investigated another young scion, Oliver Curtis, a director of Sino Resources Capital, but did not lay charges after a two-year investigation.

In jailing Hartman, who had previously been diagnosed with depression, Justice Peter McClellan provided somewhat unusual, but utterly prescient commentary on the state of Australia’s financial markets. In noting that Hartman had received an annual wage of $350,000 virtually straight out of university, McClellan stated:

A person of immature years was allowed access to market information without effective supervision in a world where the remuneration paid to him bore no relation to the remuneration paid to young employees outside the financial markets.

But while a salary of $350,000 is a veritable pittance in the world of high finance, in Hartman’s case, it does raise interesting questions. McClellan himself questioned:

Paying $350,000 to a recent graduate of 21 years of age carrying out a task of modest responsibility underlines the extent to which the values which underpin our society can be compromised.

What is more interesting is the fact that someone of Hartman’s limited qualifications (he had an undergraduate degree and no experience) could receive such a sum. While it is not unusual for high-level asset managers or investment bankers to receive upwards of $5 million or $10 million annually, young back-office operators (who essentially provide data-entry services) would be hard-pressed to take home much more than $100,000.

Why then, would Orion pay Hartman, with no experience and performing what appears to be a very junior and somewhat menial role, so much money?

Orion itself is one of many active fund managers, whose role is to effectively “clip the ticket” for large investors seeking exposure to the stock market. Founded by former Credit Suisse equities boss Tim Ryan in 2002, Orion is not a large fund, with InvestorDaily reporting that Orion saw its funds-under-management “decline 21.19% to $3.919 billion” in 2009. The performance of its Australian shares fund has been respectable, albeit not outstanding, narrowly beating the benchmark ASX Accumulation Index over the past five years.

Looking more closely, Orion is 42% owned by the ASX-listed Treasury Group, which owns stakes in eight “boutique” fund managers (including Anton Tagliaferro’s Investors Mutual) and is chaired by AFL Commission chair and founder of Hastings Fund Management Mike Fitzpatrick.

Strangely, Treasury Group, the 42% owner of Orion, doesn’t pay senior management a great deal. The company’s chief financial officer, a position far loftier than that which was held by Hartman, was paid $370,635 in 2009.

While Orion naturally doesn’t reveal its profitability, in 2009, Treasury Group reported that its share of associates’ profits (which include Orion and two other asset managers, Confluence Asset Management and RARE Infrastructure) was $6.5 million. That would mean Orion made of profit of probably about $5 million that year — making it all the more surprising that it would pay Hartman upwards of $350,000 annually.

But John Hartman is a symptom of an industry infected by greed — too much money going to too many people contributing too little. Perhaps, in John Hartman’s mind, profits from front-running was probably little different to being paid upwards of $350,000 to perform the role of a glorified data-entry administrator.