Insider Trading Guilty Ex-KPMG Manager to Spend 2 Years Behind Bars

Michelle Remo, “Big 4″ observer
May 22, 2011 /

A high court in Australia has ordered last week to send a former KPMG senior manager to jail after pleading guilty to charges of insider trading at a printing company.

Andrew Dalzell, 49, will serve the two-year imprisonment by way of “an intensive correction order” (ICO) as ordered by Justice Peter Hall of the New South Wales Supreme Court, meaning Dalzell will undertake a minimum of 32 hours of community service every month.

The ICO can only be imposed on an offender if the prison sentence considered by the court is two years or less. Offenders are further required to submit to an undertaking and an evaluation to guarantee that they will not pose risk to the society if they stay out of jail.

According to the NSW Department of Corrective Services, the penalty imposed on Dalzell goes above community service in the hierarchy of punishments, but sits below full time custody and detention at home.

The court heard that Dalzell, who pleaded guilty to one charge of insider trading, had purchased 40,000 shares in the printing company Promentum Limited in November 2006 for $52,369 using material non-public information.

Promentum Limited was mulling at the time over the acquisition of MacMillan Group, another printing company, with Dalzell as member of the advisory team.

But two weeks after he committed the insider trading, Dalzell resigned as a senior manager at KPMG when his crime was caught. He then sold his shares, losing nearly $3000.

Judge Hall ruled that the insider trading did not involve a “gross abuse” of highly confidential information, thus lowering the offense in its seriousness.

Dalzell insisted that the confidential information involved in his decision to purchase the shares was only part of the bigger picture of what made him to buy them.

According to him, he had been following a number of printing companies over the years so he had enough basis to opt to buy the Promentum shares, describing the confidential information to which he had access as a “stage-one pitch document.”

Dalzell admitted that he had purchased the shares in his “unusual” name through his usual broker, but added that he did not know he was engaging in an unlawful transaction.

Although he may not have known the legal implications of his acts, Dalzell must have been aware that what he did was “wrong and an abuse of trust”, which in turn could have unfairly yielded substantial gains for him according to Judge Hall.

 

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