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Insider Trading Sentencing Considerations

In the past 18 months, seven individuals have been convicted of insider trading and market manipulation offences, and six of them were given a sentence of imprisonment. The average head sentence across these cases was 16 months imprisonment.

When sentencing an individual for an offence of insider trading the court will take into account a number of factors. Upon a review of recent insider trading cases in Australia, Tony D’Alosio (Chairman of Australian Securities and Investments Commission) outlined the factors that courts had most commonly taken into account.

The following 17 factors are matters that courts are likely to consider when determining the appropriate penalty for an individual found guilty of insider trading:

  • The amount of profit made
  • The character of the offender
  • Any expression of remorse or contrition by the offender
  • Any extra-curial punishment (for example loss of employment)
  • General deterrence (Deter the general public from offending)
  • The manner in which the information was acquired
  • The personal circumstances of the offender
  • Whether there was any breach of confidence
  • The manner in which the trial was conducted and guilty plea
  • The relationship with the relevant company
  • Whether there was any delay in prosecution
  • The prospects of rehabilitation
  • The relationship with the securities industry
  • Specific deterrence (Deter the offender from re-offending)
  • Whether there was acceptance of a pecuniary penalty order
  • The amount of money wagered
  • Any hardship to the offender’s family.
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