Former Macquarie Bank fund manager Oswyn Indra de Silva has been sent to jail for insider trading involving front-running.
De Silva, a resident of Kuala Lumpur, Malaysia, was yesterday sentenced by the Supreme Court of New South Wales to two years and six months imprisonment, with a minimum term of 18 months to be served, on a charge of insider trading brought by ASIC.
In November 2010, de Silva pleaded guilty to the rolled-up charge, which involved 12 separate sets of transactions undertaken while he was employed by Macquarie Bank as a fund manager.
De Silva was convicted of insider trading for trading in equities and contracts for difference (CFD) products on the Singapore Securities Exchange (SGX) while in possession of information about Macquarie’s trading intentions.
He admitted to purchasing securities in particular stocks, and establishing positions in particular stocks, through his personal trading account at Phillip Securities prior to Macquarie trading in the same stocks on SGX.
De Silva was then able to dispose of his securities and exit his CFD positions and profit from the effect of Macquarie’s trading in the underlying stock. This conduct is often described as front-running.
The trades were made by de Silva between December 2006 and April 2007 and resulted in a total gross profit of approximately $1.41 million.
De Silva’s sentence included a 25 per cent discount for his early guilty plea. The maximum penalty for insider trading has recently been doubled from five to 10 years imprisonment.
In sentencing de Silva, who was subject to the former lesser maximum penalty, Justice Terence Buddin commented that in future cases it could be expected that greater penalties would be imposed on offenders than those which have been imposed by courts in the past.
ASIC acknowledged Macquarie’s co-operation and assistance in this matter.
