Former banker Oliver Curtis was found guilty by a Supreme Court of NSW jury earlier this month of using confidential information between 1 May 2007 and 30 June 2008 to trade on shifts in share prices.
In a conspiracy with his friend John Hartman, who has served time in prison himself, Mr Curtis traded in contracts for difference (CFDs) when Mr Hartman held inside information about the trading intentions of his employer, Orion Asset Management.
The insider trading activity ultimately resulted in a total net profit of $1,432,228.85 for the pair.
In a statement on Friday, ASIC said it had launched its investigation into the matter in 2009 and the conspiracy was exposed when Hartman confessed his crime to the regulator.
Justice Lucy McCallum said, in passing sentence: "Punishment by a sentence of imprisonment has real bite as a deterrent to others in the case of white-collar crime."
"The threat of being sent to gaol, provided it is perceived as a real threat and not one judges will hesitate to enforce, is likely to operate as a powerful deterrent to men and women of business," she said.
Commenting on the sentence, ASIC chairman Greg Medcraft said he was serious about market misconduct.
"This matter reinforces ASIC's commitment to pursue complex insider trading cases no matter how long they take and how vigorously they are defended," Mr Medcraft said.
"ASIC appreciates the hard work done by the Commonwealth Director of Public Prosecutions and our strong working relationship was critical in bringing the case to this point," he added.
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