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District Court 11 September 2020

R v Ho

[2020] NSWDC 905

Fraud & dishonesty
CRIME SENTENCE C’TH INSIDER TRADING TIPPING COURSE OF CONDUCT

Citation: R v Ho [2020] NSWDC 905
Court: District Court of New South Wales
Date: 11 September 2020
Judge(s): King SC DCJ

Background

The offender, Michael Ming Ho, was a financial analyst employed at fund manager Maple Brown Abbott Limited. By virtue of his finance industry career spanning roles at Merrill Lynch, Helmsec Global Capital, and Wesfarmers, he had extensive knowledge of the legal prohibitions on insider trading. He received compliance training on insider trading as part of his employment obligations.

Between July 2016 and February 2018, Ho obtained inside information about BIG Un Limited (a publicly listed video marketing company) through a series of meetings with the company's CEO. He then traded in BIG shares and options, and on one occasion passed inside information to an associate. Ho used three different brokers and seven different trading accounts, involving associates, family members, and related companies, with a total investment of approximately $1.6 million.

The investigation began in March 2018 when Ho, through his lawyers, self-reported to ASIC and voluntarily attended two interviews in which he made admissions. He pleaded guilty to six offences under the Corporations Act 2001: five counts of insider trading and one count of tipping.

  • The appropriate sentence for six Commonwealth offences of insider trading and tipping under the Corporations Act 2001, each carrying a maximum of ten years' imprisonment and/or a fine of $810,000 (or three times the benefit obtained, whichever is greater)
  • Whether the objective seriousness of the offending warranted full-time custody, given the use of multiple brokers and accounts, the extended duration, and the damage caused to market integrity
  • What weight to give to significant mitigating factors, including self-reporting, voluntary admissions to ASIC, genuine remorse, and other subjective considerations
  • Whether a sentence of three years' imprisonment could appropriately be served by way of an Intensive Correction Order (ICO), rather than full-time custody

Decision

King SC DCJ sentenced Ho on a course of conduct basis across the six offences. The judge identified the offending as serious: it was sustained over roughly 18 months, involved deliberate concealment through multiple brokers and accounts, and caused damage to market integrity. Ho's background in finance and specific compliance training meant he had clear knowledge that his conduct was unlawful, which aggravated the seriousness.

In Ho's favour, the court placed significant weight on his self-reporting and voluntary cooperation with ASIC, which the judge treated as genuine indicators of remorse and contrition. His admissions were made before any investigation had commenced against him. These subjective matters, combined with other personal circumstances not fully detailed in the published reasons, substantially tempered the sentence.

The court determined a total sentence of three years' imprisonment. Having reached that figure, the judge then considered whether full-time custody was required. After reviewing comparable authorities, including R v Glynatsis, Khoo v The Queen, Hartman v DPP, and R v Holt, the court concluded that a three-year term served by way of an Intensive Correction Order was appropriate in the circumstances of this offender.

Orders Made

  • Ho was convicted of all six offences (five counts of insider trading, one count of tipping)
  • Sentenced to three years' imprisonment, commencing 11 September 2020 and expiring 10 September 2023, to be served by way of an Intensive Correction Order (ICO)
  • Standard ICO conditions applied, including no further offences and supervision by a Community Corrections officer
  • Additional condition: Community Service Work Order of 250 hours, supervised by Community Corrections at Leichhardt
  • Ho directed to report to that office by midday the following Friday
  • Warning given that failure to comply could result in formal warnings, more stringent conditions, or revocation of the ICO and return to full-time custody

Key Takeaways

  • The District Court treated the use of multiple brokers and seven trading accounts across an extended period as a significant aggravating feature, reflecting deliberate concealment rather than opportunistic conduct.
  • A defendant's professional background and compliance training can operate as an aggravating factor in insider trading sentencing, because they demonstrate that the offender understood precisely what the law prohibited.
  • Self-reporting to the regulator before any investigation is underway, coupled with voluntary admissions, can carry substantial mitigating weight even where the offending is objectively serious.
  • Under the sentencing framework applied here, a three-year sentence for multiple Commonwealth insider trading offences does not automatically require full-time custody; the particular circumstances of the offender can support an Intensive Correction Order at that length.
  • General deterrence remains a prominent sentencing consideration in insider trading cases, given the harm such conduct causes to market integrity and public confidence in financial markets.

Legislation and Cases Referenced

Legislation:
- Corporations Act 2001 (Cth), ss 1043A(1)(c), 1043A(1)(d), 1043A(2), 1311(1)
- Crimes Act 1914 (Cth)

Cases:
- R v Glynatsis [2012] NSWSC 1551
- Khoo v The Queen [2013] NSWCCA 323
- Hartman v DPP [2014] NSWCCA 261
- R v Holt [2016] NSWSC 4634
- Parker v R [2011] 87 ACSR 52