Securities: 25 year old trader jailed for 4.5 years for insider trading
How closely do you supervise your young traders? And how well do you police them? The case of John HARTMAN, a dealer with Australian company Orion Asset Management Limited (Orion) raises some interesting risk and management issues.
Mr John Joseph Hartman, 25, of Mosman, New South Wales, has been sentenced by the Supreme Court of New South Wales to a term of four years and six months imprisonment on 25 insider trading related charges brought by the Australian Securities and Investments Commission (ASIC).
Hartman pleaded guilty to all charges against him including 19 charges of front running using insider information and six charges of passing insider information to third parties.
Hartman's sentence of four and a half years in jail would have been even more severe had he not co-operated with the investigation, pleaded guilty - and undertaken to provide assistance in future investigations.
A year ago, shortly after the investigation began, Hartman consented to the forfeiture of more than AUD1.5 million under the Proceeds of Crime Act 2002.
Hartman was perhaps fortunate not to have also been charged with money laundering: the forfeited money was found in his account with IG Markets.
Hartman was an equities dealer with Orion and the events happened between March 2006 and June 2008 (passing information) and between July 2008 and June 2008 (front running).
ASIC has been anxious to point out that Orion has provided "full cooperation and assistance in this matter."
But the question arises as to how such a young trader was able to operate outside the company's policies and procedures to such devastating effect. Now 25, his conduct began when he was just 21 year old. No information is available as to how long he had been with the company when he began passing information to third parties.
It raises issues of how much training, supervision and policing is necessary for new and junior staff and, equally importantly, whether staff should be trusted unless the contrary is proved or whether trust should have to be earned.
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