John Gay, Jonathan Moylan and a tale of two ASICs

While most of us were focused on the federal election, an important date came and went in the life of former Gunns chairman John Gay, who earlier this year pleaded guilty to insider trading.

The appeal period for his sentence, by Tasmanian Supreme Court Justice David Porter, came and went without the Australian Securities and Investments Commission and the Director of Public Prosecutions seeking to appeal.

Gay made over $3 million from the sale of shares in failing Tasmanian timber giant Gunns in late 2009, before releasing a report that sent the company’s share price plummeting 20%. In August, Justice Porter fined Gay just $50,000, or a fraction of what Gay made compared to what he would have made if he’d sold after the report. Porter appears to have accepted Gay’s arguments that he shouldn’t go to prison because he was in poor health, and that he had sold the shares because of this health problem.

The Crown had 14 days to appeal the sentence. One would have assumed ASIC would have appealed such a light penalty, given it had originally sought a prison sentence. But as it turns out, ASIC didn’t bother to appeal. The Tasmanian Supreme Court yesterday confirmed to Crikey no appeal had been lodged within the statutory timeframe.

While ASIC was waving through a minimal fine for insider trading, it was ramping up its pursuit of Jonathan Moylan, the man behind the Whitehaven Coal hoax in early January. Earlier this week, Moylan’s prosecution for “false and misleading statements” was moved to the NSW Supreme Court at the request of prosecutors. Moylan faces up to 10 years in prison.

What’s become clear as ASIC’s pursuit of Moylan has dragged on its that the 9% intra-day blip Moylan’s prank caused on January 7 is as nothing compared to what the company’s management and board have managed since. While the ASX 200 has surged to multi-year highs, the company’s share price has collapsed as Whitehaven reported significant losses and Nathan Tinkler bailed out.

Indeed, the $3.21 nadir to which Moylan’s fake press release sent the Whitehaven share price, which allegedly costs “mum and dad investors” millions of dollars, is 60% above the current share price.

ASIC’s abject acceptance of Gay’s sentence adds to its long history of being too incompetent or too scared to pursue business crooks. But when it comes to the internet, ASIC knows no fear?—?blocking thousands of websites without a thought as to who might end up collateral damage, and vigorously prosecuting activists who’ve shown up the weakness of some parts of the business media.

The lesson seems to be, if you’re going to breach corporate law, do so offline, where ASIC lacks the wherewithal or interest to aggressively pursue you.

ASIC did not respond to a request for comment on Gay’s sentence before deadline.

This article first appeared on Crikey.


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