Australian Securities and Investments Commission v Petsas [2005] FCA 88

FEDERAL COURT OF AUSTRALIA

Australian Securities and Investments Commission v Petsas [2005] FCA 88 CORPORATIONS – insider trading – civil prosecution – penalty – principles to be applied Corporations Act 2001 (Cth) ss 761D, 1043A, 1311(1), 1317G(1B), 1317H, 1317L Crimes Act 1914 (Cth) s 4B Atcheson v Everitt (1776) 1 Cowp 383 [98 ER 1142] cited Chief Executive Officer of Customs v Labrador Liquor Wholesale Pty Limited (2003) 216 CLR 161 cited Lowe v The Queen (1984) 154 CLR 606 cited Queen v Shannon (1979) 21 SASR 442 cited R v Dixon (1975) 22 ACTR 13 cited R v Firns (2001) 51 NSWLR 548 cited R v M (DES) (1993) 80 CCC (3d) 371 cited Webb v O'Sullivan [1952] SASR 65 cited Yardley v Betts (1979) 22 SASR 108 cited

Australian Financial System: Final Report of the Committee of Inquiry, Canberra (1981) G Becker, "Crime and Punishment: An Economic Approach" (1968) 76 Journal of Political Economy 169 H Hart, "The Aims of the Criminal Law (1958) 23 Laws & Contemporary Problems 401 House of Representatives Standing Committee on Legal and Constitutional Affairs, Fair Share For All – Insider Trading in Australia (1989) AUSTRALIAN SECURITIES AND INVESTMENTS COMMISSION v JOHN PETSAS AND MARC MIOT VID 1006 of 2004 FINKELSTEIN J 15 FEBRUARY 2005 MELBOURNE

IN THE FEDERAL COURT OF AUSTRALIA

VICTORIA DISTRICT REGISTRY VID 1006 of 2004

BETWEEN: AUSTRALIAN SECURITIES AND INVESTMENTS COMMISSION

Plaintiff

AND: JOHN PETSAS and

MARC MIOT

Defendants

JUDGE: FINKELSTEIN J

DATE OF ORDER: 15 FEBRUARY 2005

WHERE MADE: MELBOURNE

THE COURT DECLARES THAT:

1. On 13 January 2003, the first defendant came into possession of the following confidential information (the "Information"), namely: (a) the existence of confidential merger discussions between BRL Hardy Ltd ("BRL Hardy") and Constellation Brands, Inc.; and (b) the fact that the ANZ Bank had been engaged by BRL Hardy to perform confidential work in connection with the merger discussions; and the first defendant knew: (c) the Information was not generally available; and (d) if the Information were generally available, a reasonable person would expect the Information would have a material effect on the price or value of securities of BRL Hardy. 1. Immediately after receiving the Information on 13 January 2003, the first defendant communicated the Information to the second defendant, knowing that it was likely that the second defendant would trade in securities of BRL Hardy whilst the information remained confidential and price sensitive. 1. By communicating the Information to the second defendant, the first defendant thereby contravened section 1043A(1)(d) of the Corporations Act 2001 (Cth) ("the Act") by procuring the second defendant to acquire the BRL Hardy call option contracts on 13 January 2003. 1. Immediately after receiving the Information from the first defendant on 13 January 2003, the second defendant acquired 95 BRL Hardy call option contracts. 1. At the time he acquired the BRL Hardy call option contracts, the second defendant knew: (a) the Information was not generally available; and (b) if the Information was generally available, a reasonable person would expect the information would have a material effect on the price or value of securities of BRL Hardy Ltd ("BRL Hardy"). 1. By acquiring the BRL Hardy call option contracts on 13 January 2003, the second defendant thereby contravened section 1043A(1)(c) of the Act. THE COURT ORDERS THAT: 1. The first defendant pay to the Commonwealth a pecuniary penalty in the sum of $75,000, payment to be stayed until 14 February 2006. 1. The second defendant pay to the Commonwealth a pecuniary penalty in the sum of $65,000, payment to be stayed until 15 August 2005. 1. The defendants jointly pay the following amounts of compensation to the following persons, namely: (a) $87,342.93 to Deutsche Securities Australia Limited; (b) $30,118.26 to Optiver Australia Pty Ltd; (c) $11,033.96 to Susquehanna Pacific Pty Ltd; payments to be stayed until 15 March 2005. 1. The defendants jointly pay the plaintiff's costs fixed in the sum of $93,254.00.