Regina v Fysh

Judgment 1HER HONOUR: Stuart Alfred Fysh was tried before me with a jury on four counts of insider trading, an offence under s 1043A(1)(c) and s 1311(1)(a) of the Corporations Act 2001 (Cth). On 14 November 2012, the jury found him not guilty on the first two counts on the indictment but guilty on the third and fourth counts. 2I heard the proceedings on sentence on 11 December 2012. At the request of the offender, I also heard on the same day a claim brought against the offender by the Commissioner of the Australian Federal Police for a pecuniary penalty order under the Proceeds of Crime Act 2002 (Cth). At the conclusion of the proceedings on sentence, convictions were entered for the two offences found proved. The offender now stands to be sentenced for those two offences. 3The offences consisted in the offender's purchase in early December 2007 of 250,000 shares in a company called Queensland Gas Company Ltd. The jury's verdict establishes that the offender acquired the shares whilst in possession of inside information relating to a proposed alliance between that company and the offender's employer, a UK-based multinational energy company called BG Group plc (formerly known as British Gas). 4The explanation for there being two charges arising out of those events is that the shares were bought in two separate parcels, one of 240,000 shares on 2 December 2007 and one of a further 10,000 shares on 3 December 2007. 5At the time the offender bought the shares, the offence of insider trading carried a maximum penalty of imprisonment for 5 years and a fine of $220,000 under s 1311 and schedule 3 of the Corporations Act. The maximum penalties have since been substantially increased but that is not relevant for present purposes, since the offender stands to be sentenced according to the law as it then stood. 6The offender was on bail from the date on which he was charged until the hearing of the proceedings on sentence on 11 December 2012. He has been in custody since that date. 7For the purposes of sentencing, the Crown relied upon the evidence adduced at the trial. The offender gave evidence at the trial and supplemented that evidence in the form of an affidavit at the proceedings on sentence. The receipt of his further evidence in affidavit form, although unusual, was not opposed by the Crown. The Crown cross-examined the offender at the trial but did not seek to cross-examine him as to the contents of the affidavit relied upon on sentence. In addition to his own affidavit, the offender relied upon an affidavit sworn by his solicitor (going primarily to the issue of his cooperation with authorities), together with a large number of character references. 8The offence of insider trading is a Commonwealth offence and accordingly the offender must be sentenced in accordance with the provisions of Part 1B of the Crimes Act 1914 (Cth). One of the mandates of that Part is that the court must impose a sentence of a severity appropriate in all the circumstances of the offence: s 16A(1) of the Act. Section 16A(2) of the Act provides a non-exhaustive list of mandatory considerations to be taken into account (where known and relevant) in determining the appropriate sentence. 9Section 17A of the Act provides that a court shall not pass a sentence of imprisonment in respect of a federal offender unless, having considered all other available sentences, the court is satisfied that no other sentence is appropriate in all the circumstances of the case. 10There are custodial alternatives available by virtue of the application of s 20AB(1) of the Act. They include home detention (where the offender is sentenced to imprisonment for not more than 18 months) or an intensive correction order (where the offender is sentenced to imprisonment for not more than 2 years). 11It is appropriate to begin by considering the nature of the offence of insider trading: s 16A(2)(a) of the Crimes Act. The insider trading provisions of the Corporations Act fall within chapter 7 of the Act, which deals with financial services and markets. Those provisions were enacted with the modest object of promoting fair, orderly and transparent markets for financial products (see s 760A of the Corporations Act). The acquisition or disposal of shares by people having the unfair advantage of inside information is not only inimical to that object. Such conduct is criminalised because it has the capacity to unravel the public trust which is the lifeblood of the market. 12It is unsurprising in that context that, within the relatively few decisions on sentencing insider traders, there is a wealth of support for the view that the task must be approached on the premise that it is a serious criminal offence warranting condign punishment. The Court of Criminal Appeal has stated that it is an offence the sentencing for which calls for a stern approach reflecting a considerable deterrent aspect in order to protect the integrity and efficacy of the market. Offending by persons in a position of trust can normally be expected to lead to custodial sentences as well as to pecuniary penalties: R v Doff [2005] NSWCCA 119 at [56] per Wood CJ at CL and Adams and Bell JJ. 13It is necessary next to consider the circumstances of the offences: s 16A(2)(a) of the Crimes Act. When sentencing an offender after a trial, the findings of fact on that issue must be consistent with the jury's verdict. The court is not otherwise constrained, save by the well-established principle that any finding adverse to the offender must be one of which the court is satisfied beyond reasonable doubt, while any finding favourable to the offender may be reached on the balance of probabilities, or simply accepted if not disputed by the Crown. 14With those strictures in mind, I am satisfied as to the following facts relating to the circumstances of the offences. 15At the time of the offences, the offender was aged 51 years. He held a very senior position with BG at its head office in the United Kingdom. As already noted, BG is a large, international company which conducts business in the energy sector, with a focus on gas. The offender joined BG as a consultant in September 1998. In November 2003, he was appointed Executive Vice President and Regional Managing Director for the Mediterranean basin and Africa region of the company's business. He was also made a member of the company's Group Executive Committee at that time. The Group Executive Committee was responsible for the overall general management of the business worldwide and reported to the Board of Directors. The offender continued to hold the positions of Executive Vice President, Regional Managing Director and member of the Group Executive Committee until his employment came to an end on 24 December 2008. 16One of BG's business objectives was to enter the liquefied natural gas business in the Asia Pacific region. In 2006, a business development team was established in Singapore to pursue that objective. The head of the team was Mr David Maxwell. He recruited two senior managers to assist him, Mr Jim Seaton and Mr Gary Thompson. 17In mid 2007, Mr Maxwell gave a presentation to the Group Executive Committee at head office in the United Kingdom as to the progress of his team's endeavours. The offender attended that presentation. Mr Maxwell's presentation addressed, among other things, the fact that a potential source of liquefied natural gas for BG in the Asia Pacific region was coal seam gas, a resource of which Australia has rich reserves. The presentation identified a number of options for BG to pursue that course, including the possibility of entering into a strategic alliance with one or other of a number of Australian companies with coal seam gas reserves. 18One of the companies identified in Mr Maxwell's presentation was Arrow Energy NL. The two counts on which the jury acquitted the offender related to his acquisition of two parcels of shares in Arrow shortly after the meeting at which the presentation was given. Consistently with the jury's verdicts of not guilty on those two counts, the Crown's case at trial that the offender acquired inside information concerning Arrow at that meeting must be rejected. Nonetheless, the fact that the offender's interest in the Australian gas sector at that time coincided so closely with the business objects of his employer ought to have sharpened the offender's focus on the need for propriety in his share trading. 19Following his presentation, Mr Maxwell was encouraged to pursue the strategy of identifying a source of coal seam gas in eastern Australia. In August 2007, Mr Maxwell had an exchange of correspondence with the offender in which Mr Maxwell sent a draft "traffic light paper" for presentation to BG's portfolio development committee. The offender made suggestions as to how that document might be improved. 20Mr Maxwell presented the traffic light paper at a meeting of the portfolio development committee in early September 2007. Following the presentation, Mr Maxwell received approval for funding of £360,000 to define a strategy and business case for pursuing coal seam gas in eastern Australia and identifying and "maturing" business development options to deliver a material coal seam gas entry for BG within the next 12 months. 21The offender did not attend the presentation of the traffic light paper. However, he did receive an email from Mr Maxwell the following day stating that the Australia coal seam gas work had been approved by the portfolio development committee. In that email, Mr Maxwell noted that he saw another Australian company, Origin, as a potential feedstock supplier to a coal seam gas to liquefied natural gas project. However, the email also stated that the other three of the four main players, Santos, QGC and Arrow had a higher proportion of their gas uncontracted. 22Following the portfolio development committee's approval of funding for Mr Maxwell's team to develop a business case for pursuing coal seam gas in eastern Australia, Mr Maxwell engaged technical consultants, Advanced Resources International (ARI), to assess the size and quality of the coal seam gas resources in eastern Australia and to rate the acreage held by the companies with material coal seam gas positions. In late September 2007, Mr Seaton and Mr Thompson received the interim results provided by ARI. They reported those results to Mr Maxwell. 23Several weeks later, it was arranged for Mr Seaton and Mr Thompson to visit BG's head office in the United Kingdom for internal review of their work on the coal seam gas project. In advance of their arrival, Mr Maxwell sent an email to the offender asking him to meet up with them during their visit. In the email, Mr Maxwell said to the offender: Some very interesting insights are emerging from the technical work and we have identified a valuable opportunity which we are now moving quickly on. I have suggested to Gary and Jim that they spend some time with you sharing the work and insights/results. 24On 23 October 2007, Mr Seaton and Mr Thompson met the offender in his office at BG's head office in the United Kingdom. The Crown case was that, during that meeting, Mr Seaton and Mr Thompson presented two slides representing their evaluations of QGC and Arrow respectively. The Crown contended that the presentation of the two slides conveyed two important pieces of information to the offender. First, that Mr Maxwell's team considered QGC's net asset valuation to be more than two and a half times its then current share price on the Australian Stock Exchange, and secondly, that they considered that the net asset valuation for Arrow was about half its then current share price on the Australian Stock Exchange. 25In his evidence at the trial, the offender denied that the two slides were presented at the meeting and denied that he had ever received that information. 26It should be noted in that context that the inside information possessed by the offender at the time he bought his shares in QGC consisted of a body of information said to have been derived from different sources at different times. I accepted a submission put on behalf of the offender that the case would have to go to the jury on the basis that, before they could convict, they would have to be satisfied that the offender possessed all of the information (particularised in a document marked MFI 4), except any part which they considered made no real difference: see R v Fysh (No 2) [2012] NSWSC 1340 at [3]-[22]. 27I directed the jury accordingly, as follows (as to both MFI 3 and MFI 4): You must be satisfied that the accused possessed that body of information, that is, all of the information set out in MFI 3, taken in combination. However, you do not have to be satisfied that the information was conveyed to the accused in the precise terms in which it is set out in MFI 3. The test is whether the accused possessed the substance of that information, taken as a whole or in combination, except any part of the information that you consider makes no real difference. 28In my view it follows, consistently with the jury's verdict, that they must have been satisfied beyond reasonable doubt that the two slides were presented at the meeting with Mr Seaton and Mr Thompson in such a way as to enable the offender to absorb their contents. Even if that does not necessarily follow from the jury's verdict, I am satisfied beyond reasonable doubt of that fact. The offender's evidence on that issue was unconvincing. The combined effect of the evidence of Mr Seaton and Mr Thompson persuaded me that the offender was shown and taken through the two slides at the meeting. 29The significance of that information was of course that, whereas previously it may have appeared that Arrow was the company with which BG was likely to consider entering into some form of strategic alliance, the results of the team's assessment were more likely to conduce BG to consider dealing with QGC instead. 30On 27 November 2007, the offender went to Singapore. On the evening of his arrival, he met up with Mr Maxwell at Mr Maxwell's request. Mr Maxwell gave evidence that, during that meeting, they talked about the business opportunities that Mr Maxwell's team was pursuing in LNG and coal seam gas in Queensland but did not talk about the "intimate details of that business". Mr Maxwell said that he also discussed with the offender the issue of QGC relative to other coal seam gas opportunities, and why QGC was the best opportunity for BG to pursue. The offender denied that QGC was mentioned during the course of his conversation with Mr Maxwell in Singapore and stated that the only coal seam gas opportunities discussed at their meeting were those in New South Wales. 31The offender's evidence was contradicted by an email sent by Mr Maxwell to the offender the following day. The email, which commenced "as per our discussion last night", attached three slides in relation to the main CSG resources in Queensland (exhibit B, p248). The offender's explanation for that and subsequent emails between himself and Mr Maxwell was his interest in learning about Australian coal seam methane resources in order better to promote those resources in India. 32For the reasons already explained, unless the jury regarded the identification of QGC at that meeting as the "opportunity" Mr Maxwell's team was pursuing as a piece of information that made no real difference to the whole body of inside information relied upon by the Crown, it is implicit in the jury's verdict that they were satisfied beyond reasonable doubt that the accused came into possession of that part of the information. 33Even if that analysis of the verdict is wrong, I am satisfied beyond reasonable doubt that the offender did come into possession of that part of the information before he acquired his shares in QGC. Having regard to all of the evidence as to what was said at the meeting in Singapore, in the context of earlier correspondence including the meeting with Mr Seaton and Mr Thompson in the United Kingdom, the suggestion that the QGC opportunity was not openly discussed, whether in deliberately opaque language or otherwise, may be dismissed as fanciful. My conclusion on that issue is reinforced by the contents of the subsequent emails, which in my assessment carefully avoid stating a fact plainly known to the author. The offender's enthusiasm for the "opportunity" being pursued by Mr Maxwell's team is manifest in those communications, in which he spoke of "your northern friends" and "a beach head in Australia (hopefully very soon)". I do not accept the offender's denial that he was there intending to refer to QGC. 34The offender gave evidence that his decision to sell his Arrow shares and purchase shares in QGC was based on material he read, and discussions he had in respect of material, that was publicly available. He said that he had systematically evaluated the other large coal seam gas companies in Australia and had come to the conclusion that QGC was the only large company with significant reserves of Australian gas that wasn't committed into the domestic market. He said that he knew Mr Maxwell's team had been approved funding to develop business opportunities for securing a source of LNG in the Asia Pacific region, and that CSG in eastern Australia was one of the proposals that had been approved. He acknowledged that he was aware that Mr Maxwell was working on a Queensland opportunity at the time he (the offender) purchased the QGC shares. However, the offender said that he had no understanding as at 2 or 3 December 2007 as to what the Queensland opportunity was, and that he did not think it was in respect of QGC at the time he purchased the QGC shares. I do not accept that the offender did not have that understanding. 35The Crown case was that the offender acquired his shares in QGC whilst in possession of the following information (references to "the Team" are to be understood as referring to Mr Maxwell's team in Singapore, which was pursuing opportunities to secure for BG a source of coal seam gas in eastern Australia): The Team had identified using CSG to provide LNG as a potentially economically viable means of providing BG Group with a source of LNG in the Asia Pacific region. The Team identified four companies, Origin Energy Limited (Origin), Santos Limited (Santos), QGC and Arrow as holding over 90% of the CSG resources in eastern Australia and had clearly linked an entry position for BG Group into eastern Australia to an M&A, a "farm-in" or "partnering" with one of these four. BG Group's Portfolio Development Committee had, in September 2007, approved funding for the Team to pursue its strategic plan to deliver a material CSG entry for BG Group into eastern Australia within the next 12 months. BG Group had commissioned Advanced Resources International, (ARI) to assess the size and quality of CSG resources in eastern Australia. ARI's assessment was that eastern Australia had two world class CSG plays which were comparable to the United States San Juan Basin CBM (Coal Bed Methane, another name for CSG), namely the areas of the Undulla Nose/Walloon Fairway in the Surat Basin and Comet Ridge in the Bowen Basin. The Team's assessment of the estimated ultimate recovery (EUR) of the holdings of Origin, Santos, QGC and Arrow in the Walloon Fairway and Comet Ridge areas was 28.2 trillion cubic feet (tcf) for Origin, 13.6 tcf for QGC, 10.2 tcf for Santos and 6.9 tcf for Arrow. Arrow's holdings were of significantly inferior quality to that of QGC. The Team had prepared evaluations of QGC and Arrow in which the Net Asset Valuation (NAV) of QGC was more than 2 ½ times its then current share price on the ASX while the NAV for Arrow was about half its then current share price on the ASX. The head of the Team, David Maxwell (Maxwell), had concluded that the successful companies in Queensland involved in CSG were those with acreage that had unlocked the science of converting CSG to LNG for that acreage and that Arrow appeared to be the poorest in that regard. Maxwell had been working on a "Queensland opportunity" and from 2 December 2007 would be travelling to Australia and for the following two weeks would be locked into leading (and capturing) the Queensland opportunity involving an M&A, farm-in or strategic alliance. It was reasonable to conclude that the "Queensland opportunity" was in respect of such a proposed relationship between BG Group and QGC. 36Having regard to the way in which the jury was directed on that issue, the offender must be sentenced on the basis that the jury was satisfied beyond reasonable doubt that the offender bought the shares whilst in possession of all of that information and that all of the information met the requirement of being "inside information" within the meaning of s 1043A of the Corporations Act except as to any part of the information which they considered made no real difference. 37There is one issue, however, which is not resolved by the jury's verdict and as to which it is necessary for me to make a finding. It relates to the offender's state of mind regarding the inside information at the time he bought the shares. 38In order to be "inside information" for the purposes of the Corporations Act, it must be established that the information in question had two qualities (see s 1042A of the Act). First, it must be established that the information was not generally available. Secondly, it must be established that, if the information were generally available, a reasonable person would expect it to have a material effect on the price or value of the relevant shares. Each of those requirements is the subject of further statutory explanation to which I have given close consideration in earlier judgments published during the trial: R v Fysh [2012] NSWSC 1266; R v Fysh (No 2) [2012] NSWSC 1340; R v Fysh (No 3) NSWSC [2012] 1390. This is not the occasion for repeating that discussion. 39The Crown must establish, further, that the accused person either knew or ought reasonably to have known that the information he or she possessed had those two qualities. The significance of that issue for present purposes is that an offence involving actual knowledge that the information had those two qualities would generally be regarded as being more serious than an offence where it could only be said that the offender ought reasonably to have known, but did not in fact know. 40The offender submitted that the Court could not be satisfied beyond reasonable doubt that he knew the information had the two qualities of being inside information. I do not accept that submission. The offender's defence of counts 3 and 4 rested critically on his denial that he knew QGC was the opportunity being pursued by Mr Maxwell's team. He frankly acknowledged that, if he had known that information, he would not have bought the shares (T1066.45). That is powerful evidence of his appreciation of the character of the information. Based on my observation of all of the evidence at the trial, I am satisfied beyond reasonable doubt that the offender knew the information relied upon by the Crown had the qualities required for it to be inside information. 41There are additional factors relied upon by the Crown which in my view contribute to the seriousness of the offences. First, the offender held a very senior position within BG. He was frequently exposed to information that was highly commercially sensitive. He is the archetype of the person in whom the public trust in the integrity of the market must repose. 42Secondly, the offender acquired the inside information through his employment with BG. The Crown thus characterised him as a "true insider" acting in breach of the trust his employers held in him. As noted by the Crown, where an offender possesses inside information through their employment, their breach of trust is a significant factor. 43Thirdly, I accept, as submitted by the Crown, that the offender's motive was to obtain a personal financial benefit, putting illegal profit ahead of the integrity of the market and the interests of his employer. 44Fourthly, the amount invested was substantial. That is an important indicator of criminality. With respect to the first parcel of 240,000 shares, the offender paid $764,142.82 (an average of $3.18 per share) plus brokerage of $7641.36. With respect to the second parcel of 10,000 shares, the offender paid $32500.00 (an average of $3.25 a share) plus brokerage of $32,5.00. The total amount paid was $804,609.18. 45It is also relevant to consider the benefit derived from the offences. Upon sale of the shares, the offender received $1,437,500.00 less brokerage of $7,187.50 attributable to those shares, amounting to a total of $1,430,312.40, giving a net profit of $626,703.32. 46It was submitted on behalf of the offender that, whilst the Crown sought to paint him as a "true insider", the objective circumstances of the offences could not fairly be characterised as deliberate, clandestine insider trading with a view to a profit from inside information. Rather, so it was submitted, the offender traded on an open basis so as to continue "a previously identified strategy of purchasing an Australian coal seam gas stock, with a view to capitalising on the potential for long term gain which the offender had himself previously identified". 47In my view, that submission to a degree misapprehends the vice of the conduct prohibited by the statute and so understates the seriousness of these offences. The rationale for criminalising insider trading is simple. A predicate of a fair and transparent market is equal access to price sensitive information. Access to inside information is, of its nature, unequal. The vice of unequal access to price sensitive information is not removed by the existence of an independent motive or "previously identified strategy" that prompts the acquisition of the relevant financial products. Public trust in a fair and transparent market can only be served by immunising the market from the prospect of any trading by people on the inside, who have the unfair advantage of knowing something the market cannot know. 48I accept that the offender did not attempt to conceal his trading in any way and that his offending is to be regarded as less serious for that reason. Further, he voluntarily disclosed his purchase of the QGC shares to an in-house lawyer in January 2008. However, he did so after he had acquired the shares and at a time when BG's approval of the proposed deal at a senior level placed the offender in a position where he clearly had to make the disclosure so as to avoid any suggestion of a conflict of interest. Contrary to the position taken by the offender at the trial, I think the fact that he did not then disclose how recently he had acquired the shares is telling. I am satisfied beyond reasonable doubt that the offender deliberately kept that information to himself because he knew that he had acquired the shares knowing that the "Queensland opportunity" Mr Maxwell had been working on was some form of alliance with QGC. 49The burden of the offender's defence at trial, not resiled from at the proceedings on sentence, was that the overlap between his own astute conclusions and the inside information conveyed to him was an unfortunate coincidence which should not have precluded him from proceeding with a long-planned investment. That is not right. I do not accept that the seriousness of the offender's conduct is in any way ameliorated by the fact that he had previously identified a strategy which, as it turned out, coincided with a business object of his employer. On the contrary, the offender's persistence in that misconceived rationalisation of his conduct reinforces my perception that he has an inadequate appreciation of the objective seriousness of his offending. I do not accept, as submitted on his behalf, that his offending lies at the lower end of the scale. 50Returning to the matters listed in the Crimes Act, s 16A(2)(c) of the Act requires me to consider whether the offence forms part of a course of conduct. There were two offences committed over two days. As already noted, it is necessary to fix an appropriate sentence for each offence in accordance with the principles stated in Pearce v the Queen (1998) 194 CLR 610, and to have regard to the requirements of s 19(2) of the Crimes Act in considering any question of accumulation. The Crown accepts, properly in my view, that concurrent sentences would not be inappropriate in the present case. I do not consider that the overall seriousness of the offending is exacerbated by the fact that the shares were purchased in two separate parcels. I accept, as submitted on behalf of the offender, that the offending does not amount to an ongoing course of conduct. However, as the circumstances I have recited will reveal, the offender's decision to acquire the shares was made over a lengthy period during which he received a body of inside information from different sources at different times. Accordingly, the seriousness of the offences must be considered on the basis that their planning was well considered. 51Sections 16A(2)(d) and (e) of the Crimes Act require me to consider the circumstances of any victim of the offence and any injury, loss or damage resulting from the offence. It is well-established that insider trading is not to be viewed as a victimless crime. As stated by the Court of Criminal Appeal in R v Rivkin [2004] 184 FLR 365 at [412], the victim of such an offence is the investing community at large; the injury, the loss of confidence in the efficacy and integrity of the market in financial products. It is to be regarded as a form of cheating, or fraud: Hartman v R [2011] NSWCCA 261; (2011) 87 ACSR 52 at [94]. 52Section s 16A(2)(f) of the Crimes Act requires me to consider the degree to which the offender has shown contrition for the offence by taking action to make reparation for any injury, loss or damage resulting from the offence or in any other manner. It is relevant in that context to consider the offender's response to the Commissioner's application for a pecuniary penalty order under the Proceeds of Crime Act. Section 320 of that Act provides: A court passing sentence on a person in respect of the person's conviction of an indictable offence: (a) may have regard to any cooperation by the person in resolving any action taken against the person under this Act; and (b) must not have regard to any forfeiture order that relates to the offence, to the extent that the order forfeits proceeds of the offence; and (c) must have regard to the forfeiture order to the extent that the order forfeits any other property; and (d) must not have regard to any pecuniary penalty order, or any literary proceeds order, that relates to the offence. 53In accordance with that provision, the offender's cooperation in resolving the Commissioner's claim may properly be taken into account as a mitigating factor. Although the payment made pursuant to a pecuniary penalty order does not make direct reparation for the injury to confidence in the market described in Rivkin, it converts the benefit obtained by the offender to a benefit to the public. 54The offender's only opposition to the application for a pecuniary penalty order was an issue raised as to the proper construction of the proceeds of crime legislation. I have this morning pronounced my decision determining that issue in favour of the offender. Save for that dispute, the offender consented to the order sought by the Commissioner, including consenting to abide by my ruling on the construction issue. His agreement to forfeit the amount determined by me is a species of reparation which reveals contrition at some level. That is plainly a consideration in his favour. 55I remain equivocal, however, as to whether the offender's contrition extends to a real acceptance of the proposition that he has committed two serious criminal offences. In his affidavit read at the proceedings on sentence, he said: In hindsight, I now accept that it was foolish for me to trade in Australian energy sector shares in the face of BG's continued interest in Australia, but having done so continuously throughout the years of my employment with BG and not being part of any team looking at BG's entry options into Australia, I failed to appreciate the suspicion that could fall upon me. I bitterly regret my failure to appreciate the convergence between BG's interests and my long-standing share trading. There were systems in place within BG to guard against conflicts of interest in respect of contractual dealings, but none that required, for example, routine disclosure of personal shareholdings. As a senior BG employee at the time of this failure, this is something that I profoundly regret, particularly as I was actively engaged over several years in tightening up the governance arrangements around what I considered to be very unhealthy close personal/family GEC relationships with several wealthy private contractors to BG. 56To describe his offending in terms of foolishness and a failure to avoid suspicion does not grapple with the seriousness of the offending, in my view. 57The next mandatory consideration is any cooperation with law enforcement agencies: s 16A(2)(h) of the Crimes Act. The evidence adduced on behalf of the offender at the proceedings on sentence (primarily in the solicitor's affidavit) reveals extensive cooperation by the offender in both the investigation and the prosecution of the offences. The offender returned from England to Australia voluntarily when served with a notice to attend for examination by ASIC in September 2009. He again returned voluntarily after charges were laid against him in December 2010. Further, whilst the charges were vigorously defended, the defence was conducted intelligently and with as great a degree of cooperation as was consistent with the offender's denial of his guilt. The Crown acknowledged that, in those circumstances, the offender is entitled to some favourable consideration for a demonstrated willingness to facilitate the course of justice. 58The Crown submitted, and I accept, that the offender's conduct of the defence affords no indication of contrition or remorse. Nonetheless I accept that the degree of cooperation is exceptional and demonstrates a strong willingness to facilitate the course of justice, which must be taken into account in his favour. 59I am required to consider the deterrent effect that any sentence or order under consideration may have on the offender, together with the prospect of his rehabilitation: see ss 16A(2)(j) and 16A(2)(n) of the Crimes Act. I do not think that the need for personal deterrence is a factor to which I need give any weight in the present case. I have no doubt that the jury's verdicts, the convictions subsequently entered against the offender for the two offences and the related pecuniary penalty proceedings will have had a salutary effect on him. Even though he has not, in my view, demonstrated a proper appreciation of the seriousness of his offending, continuing to characterise it in effect as misfortunate coincidence rather than serious criminal conduct, I have no hesitation in accepting that he is extremely unlikely to re-offend. 60General deterrence must also be taken into account, even though it is not included in the list of mandatory considerations in s 16A(2) of the Crimes Act: R v El Karhani (1990) 21 NSWLR 370 at 377. It has been emphasised on many occasions that the element of general deterrence is important in white collar crimes. 61Section 16A(2)(k) of the Crimes Act requires me to consider the need to ensure that the offender is adequately punished for the offence. I have had regard to that factor in the ways indicated elsewhere in these reasons. 62Section 16A(2)(m) of the Act requires me to consider the character, antecedents, age, means and physical or mental condition of the offender. The prior good character of the offender cannot be doubted. Apart from his having no prior convictions, he tendered a very large number of what can only be described as glowing character references from work colleagues, family members and friends. Those referees speak with one voice of the offender's personal and professional integrity, his high ethical standards, his honesty and his strong commitment to his family. Many work colleagues speak of his strong loyalty and commitment to his staff. His wife and children speak of his family devotion and his generosity and support. All of the referees state that his convictions for insider trading are completely out of character with his professional and personal morals. I am satisfied, on the strength of that material, that apart from the present offences, the offender is otherwise a person of good character and strong morals. 63The evidence also addresses aspects of the offender's physical and mental health. Without derogating from the weight of that material in assessing the likely hardship of any custodial sentence, I do not think it is necessary to spell out its detail today. It is appropriate to observe, however, that the events leading to this trial have understandably left the offender in a fragile mental state. That is not an unimportant consideration. 64Section 16A(2)(p) requires me to consider the probable effect that any sentence or order under consideration would have on any of the offender's family or dependants. 65The offender is married and is currently a full time father to his two youngest daughters, aged six and three. He has three adult children from an earlier relationship. It was not suggested that the offender is the only person capable of caring for the two infant girls. It is clear that his wife, Mrs Alison Fysh, is a loving mother who also stands in the role of a primary carer to them. 66Mrs Fysh provided a letter to the court for the purpose of sentencing which is powerful testimony to the good character of the offender and the particular support he has given her. She has suffered from various health difficulties through which she has benefited from his support. I accept without equivocation that she will suffer considerable hardship if he is sentenced to a term of full-time imprisonment. 67The offender submitted that an immediate custodial sentence of any substantial length would have devastating consequences for both the offender and his family. The distress that will inevitably be occasioned in that event is not lost on me. It is an incident of every custodial sentence which separates a parent from a child. Regrettably, however, the authorities are clear in rejecting that as a warrant for departing from the sentence that is otherwise called for in all the circumstances. 68It is well-established that hardship to a child or other dependant person must be classified as "exceptional" before it can be given substantial weight for the purposes of s16A(2)(p): see R v Togias [2001] NSWCCA 522 at [15]; (2001) 127 A Crim R 23 at [13]-[17] per Spigelman CJ; at [85] per Grove J. 69In R v Hinton [2002] NSWCCA 405; (2002) 134 A Crim R 286, Howie J said at [31] (Wood CJ at CL and Sully J agreeing at [1] and [2] respectively): It is now clear that the reference in s 16A(2)(p) of the Crimes Act to the "probable effect that any sentence or order under consideration would have on any of the person's family or dependents" should be read as if it were [preceded] by the words "in an exceptional case": R v Togias [2001] NSWCCA 522 where many of the relevant cases concerned with the effect on a child of a sentence of imprisonment imposed upon the mother are considered in the judgment of Grove J. But each case will, to a very great degree, depend upon its own facts involving an evaluation of the seriousness of the objective circumstances of the offence committed, the extent of the requirement for general and, perhaps, specific deterrence, and the nature and degree of the impact of the sentence upon the third person. It should be emphasised that the question of whether the probable effect of a sentence upon a third party will give rise to an exceptional case, cannot be considered in isolation from the facts of the particular matter and the degree of criminality involved in the offences for which sentence is to be imposed. 70There will undoubtedly be hardship visited upon the offender's wife and children if a custodial sentence is imposed in the present case. Regrettably, however, such hardship is all too common and cannot be regarded as exceptional upon an analysis of the authorities that bind me. 71It is relevant, however, to consider the extreme impact these offences have already had on the offender. His submissions identified a series of matters which it was submitted amount to extra-curial punishment. First, pursuant to s 206B of the Corporations Act, the offender is disqualified from holding any corporate office for a period of five years from his conviction. It is established that this is a penalty in itself: see Rich v ASIC [2004] HCA 42; (2002) 220 CLR 129. The convictions entered on 11 December 2012 also amount to punishment of a man of otherwise impeccable character. 72The offender's evidence established that there has been considerable media attention to this case. I accept that the attendant impact upon his professional reputation will affect him professionally, economically and personally. He has lost highly remunerative employment, having earned in excess of $1.3 million per annum before his employment with BG came to an end. 73It was submitted that the offender is now unemployable. I doubt whether that is so, having regard to his evident intelligence and range of abilities. Nonetheless I accept that his perception to that effect is a burden for him. 74As a result of these criminal proceedings, the offender has had to uproot his family from an established life in the United Kingdom and resettle in Australia. I have already adverted to the health difficulties that have attended those events. 75The offender sought to adduce evidence at the proceedings on sentence as to the amount he has expended on legal fees in the defence of these proceedings. I rejected that evidence as being irrelevant to my task. I acknowledge that other judges of this Court have referred to such expenses as being a relevant factor in the sentencing process. I would respectfully disagree to that approach. The offender was of course entitled to defend the charges, and on two counts has done so successfully. However, I do not see how the Court can properly take the cost of that exercise, which was very substantial in the present case, into account. The inappropriateness of doing so is, in my view, revealed by a comparison of the circumstances of the present offender with those of an offender whose family exhausts a much smaller net wealth in the defence of legal proceedings, or an offender of no means whose defence falls to be funded by legal aid. Those are by no means uncommon features of criminal proceedings. 76The offender also pointed to the substantial delay he has had to endure in the bringing of these matters to trial, together with the fact that there has been no suggestion of any further offending in the intervening five-year period. That has no doubt increased the personal and financial stress of the proceedings. I have taken that consideration into account. 77The parties provided a large number of judgments in other insider trading cases, accepting that direct comparison between those cases and the circumstances of this case is not simple. I have considered that material, mindful of its constraints. As it happens, there is another offender who bought shares in QGC at around the same time as the present offender: see R v Panchal (unreported, District Court of Queensland, 27 April 2009). He was sentenced to two years imprisonment on each of four charges, to be served concurrently, but was ordered to be released on a conditional recognizance after serving fourteen months of that term. The circumstances of his offending were in some respects more serious; in others less; and he pleaded guilty to the charges. 78The material provided by the Crown also included the decision of this Court in R v Hannas [2002] NSWSC 1182; (2002) 173 FLR 1 and the decision of the Court of Criminal Appeal in Hartman v R [2011] NSWCCA 261; (2011) 87 ACSR 52. I accept, as submitted on behalf of the offender, that the present offending is not as serious as in either of those cases. 79Reliance was also placed on three recent decisions in which terms of imprisonment were imposed but were directed to be served by way of intensive correction order: R v Dalzell [2011] NSWSC 454; (83) ACSR 407; R v Bateson [2011] NSWSC 643 and R v O'Brien [2011] NSWSC 1553. In each of those cases the offender pleaded guilty. None involved a person of the seniority of the offender in the present case or an investment of the order made by him. I have given careful consideration to those decisions. I must ultimately, however, be guided by my own assessment of the matter before me. 80In all the circumstances of this case, I am satisfied that no other sentence than imprisonment will adequately reflect the seriousness of the offences. As already noted, there are custodial alternatives to full-time imprisonment, being home detention or an intensive correction order. The offender submitted on that basis that I should refer him for assessment as to his suitability for intensive correction within the community, as allowed under s 69 of the Crimes (Sentencing Procedure) Act 1999. 81The Crown submitted that none of the alternatives to full-time imprisonment is an appropriate sentence to reflect the seriousness of the offender's conduct and the need for general deterrence. It was further submitted that to proceed on that basis would entail appellable error. 82I have concluded that I must accede to the Crown's submission. Accordingly, there would be no utility in referring the offender for assessment, as requested. I propose to impose an aggregate sentence of 2 years, the two sentences to be served concurrently. 83I am required to determine the minimum period that justice requires that the offender spend in custody in accordance with the principles stated in Hili v R; Jones v R [2010] HCA 45; (2010) 242 CLR 520 at [36]-[45]. Having regard to the weight of the mitigating factors I have outlined and the unlikelihood that the offender will ever re-offend, I consider that the minimum term should be 12 months. 84Stuart Alfred Fysh, for the offence of acquiring 240,000 shares in QGC on 2 December 2007 whilst in possession of inside information [count 3 on the indictment], I sentence you to a term of imprisonment of 2 years to commence on 11 December 2012 and to expire on 10 December 2014. I direct that you be released on 10 December 2013 at the expiration of 12 months of that sentence on a recognisance that you be of good behaviour during the balance of the term upon your giving security in the sum of $1000 without surety. 85For the offence of acquiring 10,000 shares in QGC on 3 December 2007 whilst in possession of inside information (count 4 on the indictment), I sentence you to a term of imprisonment of 18 months to commence on 11 December 2012 and to expire on 10 June 2014. I direct that you be released on 10 December 2013 at the expiration of 12 months of that sentence on a recognisance that you be of good behaviour during the balance of the term upon your giving security in the sum of $1000 without surety.