AI-generated summaries. Not legal advice. Always verify against the official judgment on NSW Caselaw.
← All decisions
19
Court of Criminal Appeal 7 June 2013

R v GLYNATSIS

[2013] NSWCCA 131

Also reported as (2013) 230 A Crim R 99
Fraud & dishonesty
CRIMINAL LAW SENTENCE APPEAL INSIDER TRADING OFFENDING TOOK PLACE OVER 12 MONTHS CROWN APPEAL WHETHER PRINCIPLE OF TOTALITY OBSERVED

Citation: R v Glynatsis [2013] NSWCCA 131
Court: NSW Court of Criminal Appeal
Date: 7 June 2013
Judge(s): Hoeben CJ at CL, Rothman J, McCallum J

Background

The respondent was a senior consultant at PricewaterhouseCoopers who, between November 2009 and November 2010, accessed confidential client files through his firm's document management system. Those files contained inside information about impending corporate takeovers. He then traded in shares and Contracts for Difference (CFDs) in eight ASX-listed companies, both through his own account and through accounts held by relatives, for whom he acted as an informal agent.

The respondent was convicted of nine counts of insider trading under the Corporations Act 2001 (Cth), five of which were "rolled-up" charges covering multiple transactions. The maximum penalty for each offence was five years' imprisonment and/or a $220,000 fine. At first instance, Johnson J sentenced him to a total of two years' imprisonment, to be served in the community by way of an Intensive Correction Order (ICO) comprising 768 hours of community service.

The Crown appealed, arguing the original sentence was infected by error and was manifestly inadequate. The Court of Criminal Appeal upheld the appeal and resentenced the respondent to a term requiring actual full-time custody.

  • Whether the sentencing judge erred by treating the respondent's trading on behalf of relatives (without personal financial gain) as a significant mitigating factor
  • Whether the sentencing judge placed too much weight on the modest profits obtained, rather than the substantial sums invested and exposed to risk
  • Whether the original sentences gave adequate weight to the principle of general deterrence
  • Whether the principle of totality was properly applied across nine separate offences
  • Whether the aggregate sentence of two years served by ICO was manifestly inadequate for serious insider trading offending

Decision

The Court of Criminal Appeal identified error in the sentencing judge's approach on multiple grounds. Treating the respondent's trading through relatives' accounts as a significant factor in his favour was erroneous: the use of those accounts still constituted criminal conduct and was not meaningfully distinguished by the absence of personal profit. The sentencing judge also gave insufficient weight to the scale of capital exposed through the trades, focusing too narrowly on the relatively modest profits actually realised.

On general deterrence, the Court found the original sentence failed to reflect the gravity that insider trading demands. McCallum J emphasised that insider trading undermines the public trust essential to market integrity and is properly characterised as a form of cheating. The Court confirmed that the need for general deterrence in this category of offending is acute, particularly where, as here, the offender held a position of professional trust.

The Court was also satisfied that the principle of totality had not been properly observed. Given nine separate offences committed over twelve months, the aggregate two-year sentence served entirely in the community did not adequately reflect the cumulative seriousness of the conduct. These errors, individually and collectively, warranted intervention and resentencing.

On resentencing, the Court balanced the respondent's significant mitigating factors, including his youth, good character, genuine remorse, and low likelihood of reoffending, against the objective seriousness of the offending. It concluded that a period of actual full-time custody was required. Credit was given for time already served under the ICO.

Orders Made

  • The Crown appeal was allowed
  • The sentences imposed on 12 December 2012 were quashed
  • In substitution, the respondent was sentenced as follows:
  • Counts 1 to 5: 15 months' imprisonment each, commencing 12 December 2012 and expiring 11 March 2014, served concurrently
  • Counts 6 to 9: 12 months' imprisonment each, commencing 12 September 2013 and expiring 11 September 2014, served concurrently with each other and partially cumulative on counts 1 to 5
  • The respondent was to be released on 11 December 2013 (after serving 12 months in custody) on a recognisance to be of good behaviour for the balance of the term, upon giving security of $1,000 without surety

Key Takeaways

  • The Court of Criminal Appeal confirmed that insider trading carries a strong imperative of general deterrence, and that offenders should expect to serve actual gaol time regardless of otherwise good character or compelling personal circumstances.
  • Trading through a relative's account without personal financial gain does not, of itself, constitute a significant mitigating factor: the criminal conduct remains equally serious.
  • In assessing the gravity of insider trading, the capital exposed through trading activity is a more significant indicator of seriousness than the profits ultimately realised.
  • An ICO, even combined with community service hours, may be insufficient to reflect the objective seriousness of sustained, deliberate insider trading conducted over a twelve-month period across multiple transactions.
  • Where a sentencing judge fails to give proper weight to general deterrence and totality across multiple serious financial offences, the Court of Criminal Appeal will intervene and impose a sentence involving full-time custody.

Legislation and Cases Referenced

Legislation
- Corporations Act 2001 (Cth), ss 1043A(1), 1311(1)
- Crimes Act 1914 (Cth)
- Crimes (Administration of Sentences) Act 1999 (NSW)
- Crimes (Sentencing Procedure) Act 1999 (NSW)

Cases
- Pearce v R [1998] HCA 57; 194 CLR 610
- R v Bateson [2011] NSWSC 643
- R v Dalzell [2011] NSWSC 454; 83 ACSR 407
- R v El Kahani (1990) 21 NSWLR 370
- R v McKay [2007] NSWSC 275; 61 ACSR 470
- R v Nguyen [2004] NSWCCA 332; 149 A Crim R 343
- R v O'Brien [2011] NSWSC 1553; 91 ACSR 374
- R v Pantano [1990] 49 A Crim R 328
- R v Pogson; R v Lapham; R v Martin [2012] NSWCCA 225
- R v Thomas [1998] 3 VR 188
- Regina v Robert Bart Doff [2005] NSWSC 50; 23 ACLC 317
- Regina v Shawn Darrell Richard [2011] NSWSC 866
- Regina v Zamagias [2002] NSWCCA 17
- Hili v R; Jones v R [2010] HCA 45; 242 CLR 520