Regina v Xiao

Solicitors: Commonwealth Director of Public Prosecutions (Crown) Jeffreys Lawyers (Offender) File Number(s): 2015/256909

(A) THE CHARGES

1. Hui (also known as Steven) Xiao has pleaded guilty to two rolled-up insider trading offences together with another rolled-up insider trading offence which is to be taken into account pursuant to s 16BA of the Crimes Act 1914 (Cth). In relation to the charges I shall refer to all of the offences in these Remarks on Sentence as "the insider trading offences".
2. The first rolled-up charge, Charge 1, has, for reasons which will become apparent, been classified as the "Hu and Market Star Offending". The second rolled-up charge, Charge 2, relates to what has been referred to as the "Wingatta Offending". The matters to be taken into account pursuant to s 16BA of the Crimes Act in relation to Charge 1, have been referred to as the "Gold Pattern Offending".
3. The offender, in relation to each of these three categories of offending, was charged with insider trading offences contrary to the provisions of s 1043A(1)(d) and s 1311(1) of the Corporations Act 2001 (Cth).
4. At the time of the offending, the offences carried a maximum penalty of 10 years imprisonment. The maximum penalty was increased from 5 years to 10 years imprisonment with effect from 13 December 2010.
5. The offender committed the insider trading offences through or in his role as the Managing Director of an Australian company, Hanlong Mining Investment Pty Ltd (Hanlong Mining) an Australian subsidiary of a Chinese conglomerate Sichuan Hanlong Group Co Ltd (Sichuan Hanlong). Both insider trading offences involved total investments by him of AU$2,003,605 and a total personal profit of AU$1,506,669 with a further investment by him of $282,034 and a profit of $206,146 (the Gold Pattern Offending) through a company with which the offender was closely associated.
6. The insider trading offences the subject of Charge 1 and Charge 2 were committed between 1 and 15 July 2011 in connection with two Australian companies listed on the Australian Securities Exchange (the ASX) that were at the relevant times takeover targets of Hanlong Mining, namely, Bannerman Resources Ltd (Bannerman) and Sundance Resources Ltd (Sundance).
7. The particulars in relation to Charges 1 and 2 and the scheduled offence were summarised in the Crown's submissions at [11] in the following terms: "Charge 1: Hu and Market Star Offending a) Between 4 and 15 July 2011, the Offender procured his wife Xike Hu (Ms Hu) to acquire 266,500 CFDs relating to Bannerman and 6,700,000 CFDs relating to Sundance, in 35 separate transactions, by controlling and operating her trading account, contrary to s 1043A(1)(d) of the Corporations Act (the Hu Offending). b) Between 13 and 15 July 2011, the Offender procured his personal company Market Star Ltd (Market Star) to acquire 1,320,000 shares in Sundance, in three separate transactions, by controlling and operating its trading account, contrary to s 1043A(1)(d) of the Corporations Act (the Market Star Offending). Charge 2: Wingatta Offending c) Between 6 and 15 July 2011, the Offender entered into an agreement with Mr Zhu and two other Hanlong Mining executives to commit insider trading offences using a joint investment vehicle called Wingatta Ltd (Wingatta), and offences of that type were committed in accordance with the agreement, namely Mr Zhu by controlling and operating its trading accounts procured Wingatta to acquire 1,252,753 shares in Bannerman and 10,112,154 CFDs relating to Sundance, in 27 separate transactions, contrary to s 1043A(1)(d) of the Corporations Act and s 11.2A of the Criminal Code (the Wingatta Offending). Scheduled offence: Gold Pattern Offending d) Between 1 and 8 July 2011, the Offender procured a company with which he was closely associated, Gold Pattern Ltd (Gold Pattern), to acquire 1,316,327 CFDs relating to Bannerman, in 37 separate transactions, contrary to s 1043A(1)(d) of the Corporations Act (the Gold Pattern Offending).
8. This summary of the offences is based upon an Agreed Statement of Facts which was tendered at the sentencing hearing and marked as Exhibit A.
9. The relevant offences comprise a total of 65 separate contraventions under the Corporations Act and the Criminal Code.
10. The offender commenced his employment as the Managing Director of Hanlong Mining in June 2009. He was also employed as the CEO of Hanlong Resources Ltd (Hanlong Resources), which was another subsidiary of Sichuan Hanlong based in Hong Kong, from September 2010.
11. At the time of the insider trading offences he had experience in trading in various financial products including shares and CFDs and he controlled and operated share and CFD trading accounts in his own name.
12. The parent company of Hanlong Mining, Sichuan Hanlong, had businesses in China, Hong Kong, Australia, the United States, Canada and the British Virgin Islands. They included mining, energy, real estate properties, pharmaceuticals, industrial chemicals and technology.
13. Hanlong Mining was incorporated in Australia in September 2009 and it sought overseas investment opportunities in the mining industry on behalf of Sichuan Hanlong.
14. As Managing Director, the offender had the role of identifying possible opportunities for investment in the mining industry for Sichuan Hanlong and to make recommendations to it in relation to possible acquisitions.
15. He had authority to make most day-to-day business decisions by Hanlong Mining. However, investment decisions had to be approved by senior officers of the parent company, in particular, Mr Kang and Mr Liu, respectively, the Vice President and Chairman of the parent company.
16. Employees at Hanlong Mining reported to the offender and received instructions from him. These included Mr Zhu, Mr Yang and Mr Chen. The offender received remuneration by way of salary from Hanlong Mining and Hanlong Resources amounting to over AU$900,000 in the 2010-2011 year.
17. The offender exploited inside information which included highly confidential information concerning the two separate takeover targets of Hanlong Mining, both of which were publicly listed Australian companies (Bannerman Resources Ltd and Sundance Resources Ltd).
18. Prior to the announcement of each takeover offer, which included a premium on the prevailing share price of each company, the offender procured various trading accounts in the names of third parties to acquire shares and CFDs in Bannerman and Sundance.
19. Following the announcement of each takeover offer on the ASX the share prices for Bannerman and Sundance increased and the offender immediately caused the shares and contracts for different (CFDs) to be sold for a profit.
20. The offender used trading accounts in the name of his personal company, his wife, and a joint investment vehicle to acquire shares and CFDs in Bannerman and Sundance prior to the announcement of the takeover proposals.
21. The trading accounts used by him were in the names of the following: 1. The offender's personal company, which was incorporated in the British Virgin Islands, namely Market Star Limited (Market Star); 2. The offender's wife's account, that is Ms Hu's account; and 3. A joint investment vehicle, Wingatta Limited (Wingatta), which had been funded by the offender and other executives of Hanlong Mining (namely, Mr Zhu, Mr Chen and Mr Yang) and was an Australian subsidiary of a Hong Kong holding company.
22. A summary of the offending by the offender, including the number of trades, the financial products, investment and profit details were also set out in the form of a schedule provided by the Crown, Annexure A to the Outline of Crown's Submissions on Sentence dated 8 December 2015. A copy of the schedule will be attached to the written version of these Remarks on Sentence.
23. The ASIC investigation into the insider trading offences commenced on or about 21 July 2011.
24. On 13 September 2011, the offender travelled to Hong Kong by virtue of a variation of orders made by this Court which had prevented him from departing Australia. He returned after attending to a permanent residency application.
25. On 17 November 2011, he again applied to this Court for orders permitting him to travel to China to complete a doctoral thesis exam. The order was made requiring him to return to Australia by 26 November 2011.
26. On 21 November 2011, he departed Australia for Beijing via Hong Kong. In contravention of the order of this Court he failed to voluntarily return to Australia. Information obtained by ASIC indicated that he had not attended to complete his doctoral thesis.
27. From April 2012 he changed his name and obtained employment in Hong Kong under the name "Eric Xiao Jiayi".
28. On 12 January 2014, he was arrested entering Hong Kong from China under a provisional arrest warrant and was held in custody from that date.
29. On 17 September 2014, following a contested extradition hearing, an order was made for the offender to be surrendered to Australia in respect of the then allegations of contraventions of the insider trading provisions of the Corporations Act.
30. He was extradited to Australia on 9 October 2014 and he has been held in custody in Australia since his arrival on 10 October 2014.

Rolled-Up Charges

1. I have earlier referred to the fact that Charges 1 and 2 are rolled-up charges. This means that each involves more than one episode of criminal conduct during the relevant period. It means that the criminality involved is greater than a charge involving only one episode of criminal conduct.
2. On sentencing it is still necessary for the Court to assess the criminality of the offender's conduct within each rolled-up count. The Court is to have regard to the criminality as disclosed by each charge, not the number of counts: R v Knight [2004] NSWCCA 145 at [25]-[26].
3. The principal limitation is the single maximum penalty for what might otherwise have been separate instances of offending within each rolled-up count.
4. In the Crown's Written Submissions it was noted at [17] that in this case it is relevant that each charge includes the use of inside information relating to two distinct corporate takeovers, as well as numerous separate transactions on multiple days, utilising both shares and CFDs, through different trading accounts.

(B) FACTS AND CIRCUMSTANCES OF THE OFFENDING CONDUCT

Inside Information in the Possession of the Offender

1. The offender became possessed of the inside information the subject of the charges concerning takeover proposals to be made by Hanlong Mining with respect, as I have indicated, to the companies Bannerman and Sundance. The offender as Managing Director had a direct involvement in negotiations, strategy and discussions concerning the takeover offers by Hanlong Mining with respect to both Bannerman and Sundance. The inside information in relation to each was, of course, highly sensitive and confidential information as the offender appreciated. The inside information, in other words, was not generally available and if it had been generally available, a reasonable person would expect it to have a material effect on the price or value of Bannerman and Sundance shares and CFDs.

The Bannerman Proposal

1. Mr Zhu, whilst consulting with the offender, prepared and assisted in the preparation of a number of presentations and documents in relation to Hanlong Mining's investment strategy with respect to Bannerman.
2. A number of meetings and discussions took place between officers of Hanlon Mining and Bannerman between December 2010 and July 2011. The offender was centrally involved with such discussions, meetings and negotiations concerning the proposed takeover.
3. On Monday 11 July 2011, Bannerman issued a public ASX announcement that Bannerman had received a highly conditional takeover proposal from Hanlong Mining.
4. When trading on the ASX resumed, the price of Bannerman shares rose.

Sundance

1. Hanlong Mining was interested in investing in Australian iron ore companies and in or about August 2010 the senior management of Sichuan Hanlong became interested in Sundance. Mr Liu of Sichuan Hanlong directed the offender, who in turn directed Mr Zhu, to prepare an iron ore strategy paper. A number of meetings and negotiations thereafter took place. The offender was directly involved in those negotiations and the formulation of strategy which eventually led to a takeover offer being made.
2. On 15 July 2011, following a discussion with the offender, Mr Zhu, on behalf of Hanlong Mining, sent Sundance a conditional proposal to acquire 100% of the company through a Scheme of Arrangement. The actual proposal to acquire Sundance was consistent with the Sundance inside information possessed by the offender prior to the announcement of the proposal on 18 July 2011.
3. On 18 July 2011, Sundance issued a public ASX announcement to advise that Sundance had received a conditional takeover proposal from Hanlong Mining.
4. Following the announcement, the price of Sundance shares rose.

The Hu and Market Star Offending: Charge 1

1. On 30 March 2011, an account was opened in the name of the offender's then wife with IG Markets (the Hu Trading Account). At all relevant times the offender was the person controlling and operating the Hu trading account. Mrs Hu had no involvement and referred all enquiries relating to that account to the offender.

(a) Bannerman Trades - Charge 1

1. On 4 and 5 July 2011, the offender procured 11 separate orders on the Hu Trading Account, executed immediately, to acquire a total of 266,500 Bannerman CFDs for a total investment outlay of $31,303 (with an underlying leveraged exposure of $79,825).
2. On 11 July 2011, the day trading resumed after the announcement of the proposed takeover of Bannerman by Hanlong Mining, the offender procured 8 separate orders on the Hu Trading Account to dispose of the 266,500 Bannerman CFDs at prices between $0.475 and $0.485 per share. At the time of the disposal, the underlying leveraged exposure had increased to $128,102 and it resulted in a gross profit of $48,277.

(b) The Sundance Trades - Charge 1

1. On 13 and 15 July 2011, the offender procured 24 separate orders on the Hu Trading Account, executed immediately to acquire a total of 6,700,000 Sundance CFDs priced between $0.345 and $0.405 per share, involving a total investment outlay of $713,619 (with an underlying leveraged exposure of $2,571,250).
2. On 18 July 2011, the offender procured 7 separate orders on the Hu Trading Account to dispose of the 6,700,000 Sundance CFDs. At the time of the disposal, the underlying leveraged exposure had increased to $3,239,320 resulting in a gross profit of $668,070.
3. Between 13-15 July 2011, the offender procured three separate orders on the Market Star Trading Account to acquire 1,320,000 Sundance shares for a total investment outlay of $476,600 and which, on 18 July 2011, produced a personal gross profit of $157,000.

Sundance

1. The offender and Zhu were engaged, as I have indicated, in discussions, negotiations and strategy issues in the events leading up to the acquisition of Sundance. In particular: 1. From around September 2010, the offender and Mr Zhu, on behalf of Hanlong Mining, worked towards the acquisition of Sundance. The work included loan applications and applications to the relevant authorities in China and Australia and presentations to Sichuan Hanlong and its senior management. 2. In November 2010, an initial offer to purchase the Talbot Group's holding in Sundance was made by letter drafted by Mr Zhu, approved by the offender and signed by the offender on behalf of Hanlong Mining. 3. In March 2011, negotiations to purchase the Talbot Group's holding were undertaken by the offender and Mr Zhu at which time they travelled to Canada. 4. On 16 March 2011, Mr Zhu drafted a Letter of Offer on behalf of Hanlong Mining in respect of an offer to purchase the Talbot Group stake in Sundance. The Letter of Offer was only sent once the offender had considered it. He told Zhu to send it on behalf of Hanlong Mining (the offer made was slightly in excess of the offer referred to in the draft letter prepared by Zhu): Agreed Facts at [63]. 5. On 17 March 2011, following acceptance by the Talbot Group of the offer made by Hanlong Mining, Zhu reported the same to the offender: Agreed Facts at [64]. 6. On or about 20 April 2011, at a meeting of the board of Sichuan Hanlong, the offender, not Zhu, gave a presentation to the Sichuan Hanlong board: Agreed Facts at [66]. 7. In May 2011, further contact was made by Hanlong Mining to Sundance; a further investment was instigated by the offender with Zhu making contact to discuss the possibility: Agreed Fact at [76]. 8. In mid-June 2011, Zhu had direct responsibility for the Sundance project's due diligence: Agreed Facts at [70]. 9. On 11 July 2011, a further meeting was held in China at Sichuan Hanlong. At that meeting the offender presented a paper that had been prepared by Mr Zhu. 10. In July 2011, in relation to the proposed acquisition of 100% of Sundance, Zhu discussed the proposal with the offender and it was following discussion with him, that an unconditional proposal to acquire 100% of the company was sent.

Wingatta Offending: Charge 2

1. In relation to the Wingatta Offending relevant to Charge 2, the evidence supports the proposition that the offender took and assumed a dominant role. According to the Agreed Facts, in June or July 2010, the offender told Zhu that Mr Liu was supportive of officers in Hanlong Mining "co-investing" in securities of companies in which Hanlong Mining was considering acquiring an interest: Agreed Facts at [92]. There is, however, no evidence that independently supports the proposition that Mr Liu in fact told the offender, or made any statement to him, supportive of executives "co-investing".
2. In December 2010, it was the offender who reached an agreement with Zhu, Chen and Yang, to invest in a joint fund for profit, namely, Wingatta: Agreed Facts at [93]. Thereafter, consistent with that agreement, Wingatta was used as the investment vehicle: Agreed Facts at [94].
3. In January 2011, the following funds were transferred to Golden Stone and then to Wingatta and companies in the British Virgin Islands with accounts controlled by each of the offender, Zhu, Yang and Chen in the following amounts: 1. AU$700,000 from the offender. 2. AU$300,000 from Zhu. 3. AU$300,00 from Yang. 4. AU$100,000 from Chen.
4. On 15 March 2011, the offender invested a further AU$100,000 in Wingatta increasing its total funds at that time to AU$1.5m: Agreed Facts at [96].

Facts and Circumstances: The Agreed Facts (Exhibit A)

1. The particular facts and circumstances, as concerns the offender, are set out in the detailed Agreed Statement of Facts (Exhibit A). On an examination and analysis of the facts set out in Exhibit A, the following matters are apparent: 1. In relation to Charge 1 and Charge 2, it is to be noted that in relation to the first charge (involving the Hu and Market Star Offending), the offender acted alone and for his own personal benefit. In relation to Charge 2 (involving the Wingatta Offending), he was part of a joint criminal enterprise with Mr Zhu and two other executives of Hanlong Mining. His role, activities and associated aspects of his participation in relation to the Charge 2 offending are matters of central importance in relation to his sentencing for that charge. 2. The offender's personal investment in relation to Charge 1 (Hu and Market Star Offending) was $1,221,522. His personal investment in relation to Charge 2 (Wingatta Offending) was $782,081. His combined personal investment in relation to Charges 1 and 2 therefore was $2,003,603. 3. The offender's personal profit in relation to Charge 1 was $873,347. His personal profit in relation to Charge 2 was $633,320. His combined personal profit from Charges 1 and 2 was therefore $1,506,667.
2. Both the amounts invested and the profits made by the offender were, as the Crown submitted, at the high end of the scale for offending of the kind in question, both in absolute terms and as compared to other cases of insider trading in Australia to date.
3. The offender's confidence in investing the amounts that he did, in particular in relation to Sundance and Bannerman, was plainly borne of a belief, based upon his access to highly material inside information, that the investments were close to having a certain outcome.
4. Both the amounts invested and his underlying leveraged exposure, the latter being $2,651,075 in relation to the acquisition of CFDs in relation to Charge 1, and $3,849,814 in relation to Charge 2, also evidence a powerful profit motive.
5. I accept, as the Crown submitted, that both the offender's personal investment and the level of profits derived by him are material factors. The offender's total personal profit in relation to Charges 1 and 2 was just over $1.5 million ($1,506,669). His personal profit-making was the result of a planned and strategic exploitation of his position of trust as Managing Director of Hanlong Mining.
6. There are certain additional matters to be noted concerning the funding of Wingatta's Bannerman share‑trading, being part of the offending the subject of Charge 2, and its acquisition of CFDs in relation to Sundance, the other part of the offending under Charge 2.
7. The offender was involved in obtaining a transfer of US$1 million from a related entity of Hanlong Mining, for the sole purpose of allowing Wingatta to illegally trade in Bannerman shares.
8. The profit made by Wingatta over the period 6-8 July 2011, with the offender's agreement was used by it in the period 13-15 July 2011 to fund the acquisition by it of 10,112,154 CFDs with respect to Sundance.
9. The securing and use of the US$1 million obtained from a related entity of Hanlong Mining in order to fund Wingatta's acquisition of Bannerman financial products (Wingatta then having insufficient funds of its own) was, based on the Agreed Facts, a highly unusual and irregular arrangement. The intention shared by the offender, Zhu and Yang to deploy the US$1 million in funding the acquisition of financial products in Bannerman, is an aggravating factor that is to be taken into account on sentencing.
10. In the written submissions for the offender, it was contended that Mr Liu of Sichuan Hanlong had full knowledge and approved the loan to be used for the purpose for which it was used. However, the Agreed Facts do not support that submission. In his oral submissions, Mr Ramage accepted that there was no evidence on this aspect in the Agreed Facts: 14 December 2015 at T 18:45-50. He later stated that it was a matter of inference: T:19:40-45. On the basis of the Agreed Facts no inference, in my assessment, can be drawn to that effect.
11. For the offender, as Managing Director of a corporation, along with other executives, to devise and utilise such a scheme by which they could fund their own personal acquisition of financial products whilst using insider information specifically to advance their personal interests, is a demonstration both of a high-handed mentality in the offender whilst acting in gross breach of his position of trust and as to the level of criminality involved.
12. In relation to the Wingatta charge (Charge 2), as the offender was part of a joint criminal enterprise with Zhu and another two executives, the Crown submitted as follows: "It is necessary to determine, to the extent possible, the role of the Offender and what he actually did in furtherance of the enterprise, including: a) Whether the Offender was the instigator or dominant figure in the offending. b) The degree of planning engaged in by the Offender. c) His knowledge of and participation in the illegal conduct. d) His benefit from the crime."
13. I consider that the Agreed Facts (Exhibit A) deal with each of these matters.
14. As Managing Director the offender was present and he participated with Zhu, Chen and Yang in discussions to arrange the US$1 million loan from the Hanlong Mining related entity to enable Wingatta to acquire the financial products in Bannerman, it being noted in such discussions that "Hanlong Mining would soon submit a takeover offer for Bannerman … [that] they could use that chance to get their money back …": Agreed Statement of Facts at [100].
15. The evidence establishes that the offender played a central role as a principal in what was a joint criminal enterprise. As such, whilst Managing Director of Hanlong Mining he approved the enterprise and directed and participated in its execution.
16. It is clear that there was significant planning of the enterprise involving the offender acting with full knowledge of the illegal nature of his conduct in acquiring Bannerman and Sundance financial products. Wingatta had been set up as an investment vehicle by agreement between the offender, Zhu, Yang and Chen: Agreed Facts at [94]. The offender was intended to be one of those who would benefit from the joint criminal enterprise.
17. As Managing Director he was at all material times in a superior position in Hanlong Mining to Zhu, Yang and Chen. He was the most senior member of that company and assumed an ongoing involvement in negotiations and deliberations regarding takeover offers, as I have earlier indicated. At a time when he was directly involved in the takeover negotiations he gave his approval to recapitalising Wingattta by the US$1 million loan which was then used as a means for achieving his illegal objective.
18. The evidence establishes that he did play a dominant role in the joint criminal enterprise and I so find.

Planned and Premeditated Conduct

1. The amounts invested by the offender reflect, as I have indicated, a high level of confidence in him with which he acted, based upon his perception that the investments made carried virtually no risk. That, of course, arose by reason of his carefully planned and premeditated conduct which was driven by a dishonest intent utilising insider information of a very high quality and value.
2. The offender's attempts to disguise his criminal activities associated with the insider trading offences, by utilising various accounts as a form of disguise, is, of course, evidence itself of a guilty state of mind. His attempts to conceal his involvement in procuring illegal trades additionally should be regarded as an aggravating feature of the case.

(C) SENTENCING PROVISIONS

1. The offender is to be sentenced in accordance with the provisions of Part 1B of the Crimes Act 1914 (Cth). Division 2 of Part 1B of the Act sets out general sentencing principles. Section 16A(1) of that Act provides that in determining the sentence to be passed in respect of any person for a federal offence, the Court must impose a sentence, or make an order, that is of a severity appropriate in all the circumstances of the offence.
2. Section 16A(2) provides, that in addition to any other matters, the Court must take into account such of the matters as specified in s 16A(2) as are relevant and known to the Court. These include: (a) The nature and circumstances of the offence; (b) Other offences (if any) that are required or permitted to be taken into account; (c) If the offence forms part of a course of conduct consisting of a series of criminal acts of the same or similar character - that course of conduct. (d) … (e) … (f) The degree to which the person has shown contrition for the offence: (i) by taking action to make reparation for any injury, loss or damage resulting from the offence; or (ii) in any other manner; (fa) … (g) If the person has pleaded guilty to the charge in respect of the offence - that fact; (h) The degree to which the person has co-operated with law enforcement agencies in the investigation of the offence or similar offences; (j) The deterrent effect that any sentence or order under consideration may have on the person; (ja) The deterrent effect that any sentence or order under consideration may have on other persons; (k) The need to ensure that the person is adequately punished for the offence; …
3. Other matters include the character, antecedents, age, means and physical or mental condition of the person, the prospects of rehabilitation and the probable effect that any sentence or order under consideration would have on the person's family or dependants.
4. The Court is not to pass a sentence of imprisonment unless, having considered all other available sentences, it is satisfied that no other sentence is appropriate in all the circumstances of the case: s 17A.
5. Part 1B accordingly provides the fundamental starting point for the sentencing for a federal offence: Barbaro v R; Zirilli v R [2014] HCA 2 at [25].
6. In the present case the offender procured a large number of trades whilst in possession of inside information, thereby committing multiple contraventions of the prohibition contained in s 1043A(1)(d) in Chapter 7 of the Corporations Act.
7. It is well accepted that the criminalisation of insider trading plays a significant role in supporting the objectives set out in Chapter 7 of the Corporations Act which includes the promotion of confident and informed decision-making by consumers of financial products and the promotion of fair, orderly and transparent markets for financial products: see Joffe v R; Stromer v R (2012) 82 NSWLR 510; [2012] NSWCCA 277 at [34].
8. It has been observed in a number of cases that a person who commits insider trading possesses an unfair advantage against legitimate investors in the market. It has been observed that insider trading is a form of cheating or fraud: R v Glynatsis (2013) 230 A Crim R 99; [2013] NSWCCA 131 at [79].
9. It has also been recognised that insider trading erodes public confidence in the fair, orderly and transparent operation of the market: R v Rivkin (2004) 59 NSWLR 284; [2004] NSWCCA 7 at [412].
10. As the Crown submitted, because of the need to protect the integrity of the market and the Australian economy generally, insider trading has been described as a serious criminal offence: R v Zhu (2013) NSWSC 127 at [18]; DPP (Cth) v Hill and Kamay [2015] VSC 86 at [46]; R v Joffe; R v Stromer (2015) 106 ACSR 255; [2015] NSWSC 741 at [97]; Kamay v R [2015] VSCA 296 at [52].
11. In the present case the Crown further submitted that, based on the offender's position, the scale of the trading that he procured, the high quality of the inside information, the exploitation of two separate takeover announcements concerning publicly listed Australian companies, the use of leveraged products to maximise profits and the attempts at concealment that the offender's conduct represents an extremely serious breach of the statutory prohibition on insider trading: Crown's Submissions at [26]. The facts set out in the Agreed Statement of Facts (Exhibit A), in my assessment, provide a sound foundation for that submission.

(D) MAXIMUM PENALTY

1. The maximum penalty an insider trading offence, as the Crown noted, is the highest available in the Corporations Act and that that is a further indication of the seriousness with which this type of offending is regarded by the legislature.
2. As earlier noted, in recent years, Parliament effectively doubled the maximum penalty for an offence under the insider trading provisions to 10 years. In R v De Silva (2011) 84 ACSR 240; [2011] NSWSC 243 at [57], Buddin J observed: "[T]he legislature has recently seen fit to dramatically increase the maximum penalty which is available to be imposed upon such offenders. That, in turn, is likely to produce more severe penalties, everything else being equal, than those which have hitherto been imposed."
3. As the High Court has observed, judges need sentencing yardsticks and that it is well accepted that the maximum sentence available may in some cases be a matter of great relevance: Markarian v R [2005] 228 CLR 357 at [30].
4. The High Court in that case also observed that careful attention to maximum penalties will almost always be required, first, because the legislature has legislated for them; secondly, because they invite comparison between the worst possible case and the case before the court at the time; and thirdly, because in that regard they do provide, taken and balanced with all of the other relevant factors, a yardstick: at [31].

Objective Seriousness of the Offences

1. It is well accepted that, generally speaking, insider trading is not a "victimless crime"; it is a serious criminal offence as I have already indicated. Insider trading not only has the capacity to undermine the integrity of the market, but it also has the potential to undermine aspects of confidence in the commercial world generally: Hartman v Director of Public Prosecutions (Cth) [2011] NSWCCA 261 at [94]. Insider trading has the capacity to undermine, to a significant extent, the integrity and the efficacy of markets: R v Joffe (2015) 106 ACSR 525 at [97] per RA Hulme J. As his Honour observed, nothing less than strict conformity to the exacting standards of honesty are expected and required of persons who receive prior sensitive information.
2. The amounts invested, and the amount of personal profit obtained from the offender's insider trading, were substantial. The particular values of each of the rolled‑up charges are among many considerations relevant to determining the seriousness of the offending: Kamay v R [2015] VSCA 296 at [28].
3. The objective gravity of the insider trading offences may be determined by reference to a number of other factors. These include, in the present case, as I have stated, the position of the offender as Managing Director and the steps he took to disguise the transactions and, additionally, the amounts invested and the anticipated gain: Director of Public Prosecutions v O'Reilly [2010] VSC 138 at [18].
4. The offender's role and responsibilities as Managing Director, included his direct involvement in the takeover offers, as I have indicated. The fact that he was well aware that he was improperly using highly sensitive and confidential information for his own personal gain is a matter of particular importance in assessing the gravity of his offences. His extreme breach of trust, occurring in those circumstances is in itself also a most important consideration that elevates the gravity of the offences to a very high level.
5. Profit is a relevant factor to be taken into account in determining the objective seriousness but in most situations the better indicator of the extent of the criminality must be said to be the size of the transaction and the best way of assessing that is by reference to the amount of money invested or placed at risk: Glynatsis [2013] NSWCCA 131 at [54] per Hoeben CJ at CL (with whom Rothman and McCallum JJ agreed).
6. In this respect the amounts of money invested by an offender, and the level of profits made, will often vary significantly from case to case. In Kamay, supra, the leveraged nature of the margin FX contracts meant that the offender in that case only needed to invest a relatively small amount of his own money to make very substantial profits or losses: per Hollingworth J at [55].
7. In the present case the offender, as earlier noted, expended very significant amounts of money in the purchase of shares and the acquisition of CFDs. The offender's insider trading offences, as I have indicated, involved total combined personal investments of $2,003,605 with a further investment of $282,034 through the company with which he was closely associated.
8. The Victorian Court of Appeal in Kamay, endorsed the observation that sometimes profit will loom large in the sentencing exercise, as for example, where it is the result of relatively small investments in highly leveraged financial products in order to obtain disproportionately large profits: at [37]. In cases such as the present, where attempts are made to maximise profit through the use of leveraged products such as CFDs, an offender need only pay a fraction of the value of the underlying shares to obtain the full benefit of the expected change in price: DPP v O'Reilly [2010] VSC 138 at [24].
9. Viewed in this light, it was the Crown's submission that both the amounts invested and the profits made by the offender were at the highest end of the scale, in absolute terms but also when compared to other cases of insider trading in Australia to date: Written Submissions at [65]. The Crown produced a schedule of other relevant cases as part of its submissions to which I have had reference.
10. The circumstances within which substantial profits were ultimately made are also a relevant factor. In the present case, the use of direct and actual knowledge of the imminent takeover offers relevant to both Charge 1 and Charge 2 are circumstances that increase the objective seriousness of the offences.
11. Associated with the lastmentioned factor, the nature and the value of the inside information which enabled the offender to obtain substantial profits over a quite small period of time is also an important determinant as referred to in Kamay v R, supra, at [32].
12. The significance of general deterrence in sentencing for insider trading offences has been the subject of consideration in many cases: R v Rivkin (2003) 198 ALR 400 at [44]; [2003] NSWSC 447 per Johnson J; Khoo v R [2013] NSWCCA 323 at [2]-[5], [22]; R v Glynatsis [2012] NSWSC 1551 at [140].
13. In order to give practical effect to the above principles, it has been observed that the "real bite" of general deterrence only takes hold when a custodial sentence is imposed: R v Hinchcliffe [2013] NSWCCA 327 at [276]-[278]. As the Crown observed, beyond the mere fact of a custodial sentence, general deterrence requires the Court to consider both the term of any sentence and the time to be actually served in custody: R v Hill; R v Kamay [2015] VSC 86 at [93] (the decision in that case was upheld by the Victorian Court of Appeal; Kamay v R [2015] VSCA 296).

(F) HIGH LEVEL SERIOUSNESS OF THE OFFENCES

1. The Crown submitted that the offender's conduct in this matter is one of the most serious instances of insider trading in Australia to date. In summary, the insider trading offences committed by the offender are serious examples of such offending for the following reasons: 1. The charges both involved rolled-up charges involving multiple episodes of criminal conduct; 2. Charges 1 and 2 involved the offender's use of highly confidential information in relation to takeover offers for his own benefit and in gross breach of trust. 3. The evidence establishes, to the requisite standard, that the offender knew that he possessed and controlled highly material inside information that was not generally available to the market, and that he was fully aware that his conduct was wrong, dishonest and contrary to law. 4. The evidence includes the fact that in addition to being directly involved in confidential negotiations and other matters, as I have indicated, in relation to the two companies, he was signatory to a confidentiality agreement in relation to the negotiations with Sundance and was party to discussions concerning similar arrangements in relation to Bannerman. Further, he was fully aware of the confidential and sensitive nature of the information and adopted the strategy of using third-party accounts, as I have indicated, as a disguise. 5. The offender used the inside information to engage in a total of 65 separate contraventions under the Corporations Act 2001; 6. The offences the subject of the charges, and the offending to be taken into account under s 16BA, were carefully planned and premeditated; 7. The insider trading information obtained and utilised, as I have indicated, was in fact of high quality. It has been observed that a high degree of materiality of inside information would generally lead to a finding of greater objective seriousness; a low degree of materiality might, but not necessarily, lead to a finding of lower objective seriousness; and knowledge by the offender of the degree of materiality bears on the issue of moral culpability: R v Joffe per RA Hulme J at [98]-[99]. 8. The monies invested by the offender involved large sums of money, as I have indicated, in excess of $2,200,000. 9. The leveraged nature of CFDs assisted in making the substantial profits. 10. The fact that the offender made a personal profit from the activities the subject of the two charges of approximately $1.5 million. 11. The motivation of the offender in committing the subject offences was personal greed.
2. These matters place the objective seriousness of the offences in the high range of seriousness for such offences.

(G) THE OTHER OFFENCES TO BE TAKEN INTO ACCOUNT: S 16A(2)(b)

1. As earlier indicated, the Gold Pattern Offending was placed on a s 168A of the Crimes Act schedule and needs to be taken into account when sentencing for Charge 1, being the Hu and Market Star Offending.
2. The relevant principles to be applied to a scheduled offence were stated by Spigelman CJ in Attorney-General's Application under s 37 of the Crimes (Sentencing Procedure) Act 1991 (No 1 of 2002) (2002) 137 A Crim R 180; [2002] NSWCCA 518 at [38].
3. It was there observed that the entire point of the process of taking scheduled offences into account is to impose a longer sentence than would otherwise have been imposed if the primary offence or offences had stood alone. Although a court is sentencing for a particular offence, it takes into account the matters for which guilt has been admitted, with a view to increasing the penalty that would otherwise be appropriate for the particular offence. There are two elements: personal deterrence and the community's entitlement to exact retribution for serious offences.
4. With the scheduled offence the court is sentencing, of course, only for the principal offence or offences. On the facts concerning the scheduled offence in the present case, the Crown noted that the Gold Pattern Offending represented 23% of the total investment and profit the subject of the Hu and Market Star Offending. Also, it involved the additional procurement of trades by another corporate vehicle based in the British Virgin Islands. The offender had a close connection to the entity, Gold Pattern, its bank account, its trading account and the use of its funds.
5. The Crown submitted that in the circumstances in which the Statement of Agreed Facts by the offender does not include details of the Gold Pattern Offending or how he procured the trades, his admission to procuring identified the particular facts supporting these matters in its Written Submissions at [89a]-[89g].
6. The Crown submitted that in the circumstances in which the Statement of Facts as agreed by the offender does not include details of the Gold Pattern Offending, or how he procured the trades, his admission to procuring Gold Pattern in an unspecified way may be used as demonstrating only limited contrition and acceptance of responsibility.

(H) FURTHER MATTERS TO WHICH THE COURT IS TO HAVE REGARD WHEN PASSING SENTENCE: SECTION 16A(1)(2)

Section 16A(2)(c)

1. In relation to the issue as to a course of conduct in terms of s 16A(2)(c) of the Crimes Act, I accept, as the Crown observed, that the offending cannot be regarded as a single course of conduct for the reason that it involved quite distinct personal trading as well as separate joint criminal enterprise. However, that said, the two charges do involve significant rolling-up of numerous separate contraventions.

The Issue of Contrition: Section 16A(2)(f) of the Crimes Act, and Plea of Guilty: Section 16A(2)(g) of the Crimes Act

1. The fact that the offender entered a guilty plea may itself be taken as evidence of contrition. However, as the Crown observed, the plea must be taken having regard to other relevant matters. These include the extent to which a guilty plea may demonstrate contrition in the context of the strength of the Crown case and the fact that the offender has not otherwise expressed any contrition or remorse for his offending. I will refer shortly to other evidence relied upon in this case as evidencing contrition or remorse. I accept, of course, the Crown submission in that respect. And it is clear, in my assessment, that the Crown case was indeed a very strong one.
2. The utilitarian discount identified in the guideline judgment in R v Thomson & Houlton (2000) 49 NSWLR 383 does not apply to federal sentencing. I will come to the question of the significance of the offender's pleas shortly.
3. One of the significant factors as relevant to the extent of any reduction in sentence is the timing of the pleas and whether they were entered at the first reasonable opportunity.
4. As the Crown accepted, the offender's pleas are to be taken as having been made at an early stage in the proceedings, they having been entered in the Local Court prior to committal. The Crown, however, also observed that some regard must be given to the fact that the offender failed to return from overseas in breach of orders made by this Court prior to charges being laid, and once he was charged he was later arrested on an international warrant and then fully contested his extradition proceedings in Hong Kong.
5. The Crown relied on such matters in support of its contention that the offender availed himself of multiple opportunities to avoid prosecution and conviction for the present offences.
6. I will shortly indicate that it is appropriate to have regard to the offender's pleas, made at an early stage, but the factors to which the Crown referred do require a moderated approach, as I will shortly indicate.

Deterrence: Section 16A(2)(j), (ja) of the Crimes Act

1. In relation to the need for general deterrence it is clear that the serious nature of the offender's conduct requires both specific deterrence and general deterrence to be taken into account.
2. The Crown properly observed that the offender will be automatically disqualified from managing an Australian corporation for a period of five years and that this may be considered to be an additional penalty, a matter relied on by Mr Ramage in his submissions in relation to what was referred to as an extra curial or additional penalty.

Character, Antecedents, Age, Means and Physical or Mental Condition of the Offender: Section 16A(2)(m) of the Crimes Act

1. The offender has no prior convictions in Australia and there is no known criminal record overseas. The Crown submitted that in the context of his ongoing undetected criminal conduct less weight should be given to his prior good character at the time he first commenced his illegal trading.
2. It was submitted by the Crown that the offender's ongoing undetected conduct in respect of the two separate takeover offers demonstrated a continuing attitude of disobedience to the law and, accordingly, there is an increased need for retribution and general deterrence. I accept that submission.
3. As to the offender's age, he was 36 years at the time of offending. By that time he was an experienced corporate executive who had exercised powers and responsibilities of a managing director of a corporation and had been involved in high level negotiations with the executives of publicly listed Australian companies.
4. It is accepted as a general principle that some limited recognition can be given to the position of a foreign national serving a sentence of imprisonment in Australia, due to the possibility of hardship from language difficulties and a more restricted support network.
5. The offender, though a foreign national, plainly has a reasonable command of the English language. I note that his permanent residency visa expired in June 2014.
6. There is no evidence as to any specific hardship that he has or is likely to experience whilst in custody being a foreign national.
7. As to other subjective matters arising in respect of personal factors concerning the offender, reliance was placed upon the Report of Anthony Diment, Consultant Psychologist, dated 27 October 2015 (Exhibit 4) (Report) in these proceedings.
8. The Crown raised objections to particular passages in the report, they being on page 6 and page 10.7 of the report. The Crown contended that those paragraphs either should be held to be inadmissible or, if admitted, not be given any weight.
9. The first relates (on page 6) to statements made by the offender to Mr Diment as to personal circumstances preceding and leading up to the time of the offending conduct, including particular stress and factors operating upon him. At page 10, reference is made to similar statements in which the author in his summary or opinion in referring to what was referred to as a higher anxiety state, expressed the opinion that this was likely to have affected his decision-making at the time of the offending.
10. The authorities in this area are well known. I refer in particular to the decision of the Court of Criminal Appeal in R v Qutami [2001] NSWCCA 353 which emphasises the need for great caution in acting upon opinions of professionals such as medical practitioners or psychologists that are based on statements that have not been the subject of admissible or direct evidence. The caselaw indicates, as the Crown submitted, that caution needs to be exercised in reports that rely on hearsay material provided by an offender, unsupported by evidence from him. They should ordinarily be given limited, if any, weight. I accept the submissions from the Crown and, in relation to the particular passages to which I have referred, I do not intend to place any weight upon them.

(I) CO-OPERATION WITH AUTHORITIES

1. Whilst the offender has not provided any co-operation to investigating authorities, and failed to return to Australia in breach of Court orders, it is noted in contrast that the co‑offender, Zhu, co-operated with ASIC, in relation to his own offences, prior to charges being laid. In addition to the assistance he provided he agreed to provide future assistance and also consented to a pecuniary penalty order in respect of the benefits obtained from his offending.
2. I have been advised today by Mr Ramage, counsel on behalf of the offender, that there has been no finalisation of any proceedings concerning the making of a pecuniary penalty order in these proceedings concerning the offender and, accordingly, it is not a matter I can bring into account.

(J) REMORSE OR CONTRITION

1. There is no direct evidence from the offender amounting to a demonstration of any remorse or contrition other than that which may be said to be inherent in his pleas of guilty. I accept that the pleas do, however, contain in them an element of remorse or contrition or can be so construed.
2. In contrasting the matter of Zhu, a favourable finding was made in his case of a substantial contrition and remorse in that case.
3. In his Report, Mr Diment recorded the offender saying that he felt very ashamed and very sorry to his mother-in-law, especially, in respect of this offending.
4. Mr Diment stated that the offender had expressed his deep contrition as regards his offending and as much as possible had given thought to his future: Report at p 11.
5. A number of testimonials were tendered at the sentence hearing (Exhibit 1). In a letter from the offender's grandparents, who are resident in China, reference was made to the offender's application to his studies over time and to his achievements. His grandparents record that he admitted to them that he was really sorry to Australia for his act and felt remorseful.
6. In a testimonial by his former wife, reference is made to the offender's expressions of regret for his wrongdoing and to his remorse and his strong determination to make amends in the future.
7. Additionally, I note that the offender stated to Mr Diment that he appreciated that his offending was unfair to other investors and that he had no excuses for that. He further stated that he wanted to pay back to society in some way in the future and to use his case as an example to others as to what not to do: Report at p 10.
8. In the circumstances where there is no evidence from the offender himself given at the sentencing hearing, if is difficult to determine the extent of genuine remorse or contrition by him, as distinct, for example, from his regret in finding himself in the position that he is now in. That said, I am prepared to accept that he has made expressions indicating contrition in respect of his offending. I conclude that they are to be taken as having been made genuinely and I propose, accordingly, to bring into account in determining the appropriate sentence to be imposed the fact that there is evidence of expressions by him of contrition or remorse.

(K) GOOD CHARACTER

1. It was submitted on his behalf that he has no prior convictions and is otherwise to be taken as a person of good character. It was acknowledged that in sentencing for white collar offences, less weight has sometimes been attached by sentencing judges to prior good character because of the absence of any criminal offences and good character that placed the offender in the position which enabled him to commit offences such as the insider trading offences. However, it was submitted, it is still relevant and important.
2. I consider the offender's prior good character to be relevant, in particular, to determining the appropriate sentences and I take into account his good character and, in particular, in relation to the issue of specific deterrence.
3. I have earlier noted that the offender was 36 years of age at the time of the offending and I note that Zhu, his co-offender, at the time was 27 years of age.

(L) PARITY

1. The issue of parity was raised in submissions by Mr Ramage, on behalf of the offender. Firstly, as to the parity principle, the submissions for the offender raised an issue as to the application of the parity principle. That principle requires that like offenders should be treated in like manner. However, as the High Court observed in Green v The Queen (2011) 244 CLR 462, the parity principle allows for different sentences to be imposed on like offenders to reflect different degrees of culpability and/or different circumstances (per French CJ, Crennan and Kiefel JJ at [28]).
2. Formal identity of charges against offenders whose sentences are compared is not a necessary condition of the application of the principle. However, as the High Court observed, there can be significant practical difficulties in comparing the sentences of participants in the same criminal enterprise who have been charged with different crimes. The submissions as to the parity principle in this case are relevant to the sentencing for Charge 2 (the Wingatta Offending) insofar as the co-offender, Zhu, has previously been sentenced in respect of insider trading offences related to the same joint criminal enterprise.
3. The circumstances of the respective offending of co-offenders must include consideration of the roles played by them in the instigation of the plan, the anticipated and actual profit made by each offender, and the extent of involvement of each in each of the trades utilising the insider information: Kamay v R [2015] VSCA 296 at [63].

(M) THE ROLES AND ACTIVITIES OF THE OFFENDER AND HIS CO-ACCUSED, MR ZHU

1. It was submitted on behalf of the offender that the co-accused Zhu was equally involved, if not more so, in all of the market negotiations that led up to offers being put to Bannerman and Sundance. The submission made reference to the Agreed Statement of Facts at [36]-[76]: Written Submissions at p 21.
2. It was additionally submitted for the offender that, in relation to the Wingatta Offending, Zhu was responsible for investments and there was nothing in the Agreed Facts that supported the proposition that the offender was the dominant figure in the ongoing operations. It was submitted that the facts indicated a "collective decision" by all members of the Wingatta fund. Further, it was contended that the offender's position could not be distinguished from Zhu who, it was contended, had much, if not more, direct involvement in the takeover negotiations and that he was responsible for the actual trades: Written Submission on behalf of the offender, p 21.
3. With respect, I do not consider that those submissions properly address the roles and the participation of the offender and Zhu in relation to the events leading up to the Bannerman takeover or in respect to the events leading up to and concerning the Sundance takeover.
4. The Statement of Agreed Facts states that although the offender and Zhu worked together in relation to meetings, negotiations, confidentiality agreements and discussions and other matters, Zhu, as would be expected of a subordinate employee, consulted on a regular basis with the offender to seek his approval or confirmation on action that Zhu had taken or what was proposed would be taken. I have earlier referred to some of the details relating to the events concerning both takeover matters.
5. In relation to Bannerman: 1. The offender and others (including Zhu, Yang and Chen) were involved in activities from April 2011 once Bannerman had been identified as a takeover target: Agreed Facts at [42]. 2. Thereafter from time to time Zhu would consult with the offender and pass on to him proposals made on behalf of Bannerman or its advisors: Agreed Facts at [43]. 3. In June 2011, a proposal for the acquisition of 70% of Bannerman shares was received by Zhu, who then consulted and discussed it with the offender: Agreed Facts at [44]. 4. On 4 July 2011, the offender, following instructions from Mr Liu, told Zhu to amend a draft proposal for the takeover offer to Bannerman from 70% to 100% acquisition: Agreed Facts at [46].
6. In relation to the events leading up to the acquisition of Bannerman, Zhu was at all times subordinate to the offender and did not act independently but consulted with the offender and kept him informed and sought instructions and approvals or agreement from him in relation to events preceding the conditional proposal drafted by Zhu and approved by the offender on or about 9 July 2011.
7. On the evidence, and in particular in relation to the question of parity, there are clearly a number of disparities in the facts that are to be taken into account in respect of the offender, as compared to the facts for the sentencing of the co-offender Zhu.
8. It is to be borne in mind, of course, that the offender is only to be sentenced for the facts contained in the Agreed Statement of Facts. On that basis I accept the submissions for the Crown that there are a number of significant differences between the circumstances of the offending of the offender and those relating to the offending of Zhu. In that respect, the Crown noted the following matters: 1. Position in Hanlong Mining: The offender was at all times Managing Director of Hanlong Mining and the CEO of Hanlong Resources. Zhu, who held the position of Vice President, Investments at Hanlong Mining was a subordinate to the offender. 2. Reporting and Instructions: The relevant positions of the offender and Zhu involved Zhu reporting to, and receiving instructions from, the offender in relation to significant investment decisions. A finding was made in the Remarks on Sentence so far as Zhu was concerned, to his benefit, that he had been the subject of what was referred to as "a poisonous work culture" which involved the offender. 3. The roles in the Wingatta Offending: The Crown observed that the offender was the dominant figure in the Wingatta Offending. Zhu, on the other hand, was found to have had a somewhat lesser role, although he was responsible for executing the trades. 4. Share of Wingatta investment: The offender's share of the total investment in the Bannerman and Sundance trades was $782,081. As previously noted, Zhu's share was $333,563. 5. Share of Wingatta profit: The offender's share of the total profit from the Bannerman and Sundance was $633,320, as earlier noted. Zhu's share was $305,074. 6. Other offending: The offender separately invested a further $1,221,522 in Bannerman and Sundance trades, and obtained a further profit from the personal trading, as earlier indicated, of $873,347. Zhu separately invested a further $49,098 and obtained a further profit through his personal trading of $67,430. In two earlier periods with previous employers, Zhu had been involved in trades worth $70,393 and a total profit of $83,370.
9. The Crown submission, which I accept, was that the offender's conduct in the Wingatta Offending was significantly more serious than that of his subordinate Zhu, and his subjective circumstances are significantly less compelling than was the case in Zhu.
10. In addition, the offender's other offences on the schedule as represented by Charge 1 in my assessment are also more serious than the offences of Zhu.

Pre-Sentence Custody

1. The sentence to be imposed may be backdated so as to commence on a date before the sentence is imposed in accordance with the provisions of s 16E of the Crimes Act and s 47(2)-(3) of the Crimes (Sentencing Procedure) Act 1986 and so to take account of pre-sentence custody.
2. The offender has been in custody, as I have indicated, since his arrest in Hong Kong on 12 January 2014 following which he was extradited to Australia and has been bail refused since.
3. The Crown accepted that the offender's pre-sentence custody should be taken into account by backdating the commencement date of the sentence to start on 12 January 2014.

Rehabilitation Prospects

1. I turn now to further matters. One concerns the rehabilitation prospects of the offender. The other concerns the reduction or discount to be allowed for his guilty pleas, to which I earlier referred.
2. As to the former, his rehabilitation prospects, the offender did not give evidence, as I have said, at the sentencing hearing. Accordingly, the evidence relevant to his rehabilitation prospects is limited. In his Report, Mr Diment noted that the offender on examination had indicated that he has "average" levels of social support which is said to be a favourable prognostic sign for future adjustment (Report at p 9). In terms of prognosis, Mr Diment stated that the risk factors for re-offending were, in his opinion, low. These were identified as including the absence of any prior criminal history, a supportive family, self-awareness and no criminogenic traits as assessed on PAI (Personal Assessment Inventory) testing, as well as an express motivation for caring for his family and working to achieve that goal. Mr Diment stated that there were no anti-social personality traits. On this basis, he assessed the offender's prospects for rehabilitation as being good.
3. I accept the analysis undertaken by Mr Diment and, on that basis, I have concluded that the offender has reasonably good prospects of rehabilitation.

Discount on Sentences by Reason of Offender's Guilty Pleas

1. In relation to his guilty pleas, there is no obligation for there to be any specific quantification of a discount for a guilty plea: R v Tylor (2007) 173 A Crim R 458; [2007] NSWCCA 247 at [114]. The offender's pleas may be taken, as I have indicated, as indicating some acceptance of responsibility and the fact that they were entered at an early stage is an important factor. I take into account both of these factors.
2. The pleas, however, are also to be evaluated, as the Crown has submitted, in the overall context which includes his failure to return from overseas in breach of Court orders prior to charges being laid. I have sought to assess these matters in assessing the value of the guilty pleas when determining sentence and how his pleas operate in mitigation or reduction of any sentence to be imposed.

Assessment of the Offender's Guilty Pleas

1. In the circumstances of this case, I consider that the offender's guilty pleas are to be taken into account on sentencing as a mitigating factor in the determination of sentence. For that purpose his guilty pleas, in my assessment, carry moderate significance, as distinct from them being at the highest level of significant for the purpose of sentence discounting. Accordingly, the offender's pleas have been taken into account by me on the above bases in determining the sentences to be imposed.

Need for Adequate Punishment: Section 16A(2)(k) of the Crimes Act

1. Section 16A(2)(k) of the Crimes Act requires attention to be given to the need for adequate punishment. In determining punishment, in some cases it is necessary to have regard to what has been referred to as "extracurial" or additional punishment.
2. The Crown noted that the offender will be automatically disqualified from managing an Australian corporation for a period of 5 years. This serves the function of protecting the public from dishonest officeholders.
3. The loss of a career and professional reputation may, in some cases, amount to extracurial punishment. The Crown noted that the offender's abuse in this case was of his own corporate office and that it was that which permitted him to commit his crimes and that he must have appreciated that it would impact on his career and reputation in the business community.
4. The Crown also observed that it is by no means clear that the offender would not be able to continue his career in some capacity, particularly overseas as a foreign national. The Crown referred to the fact that he had for a period obtained employment in Hong Kong under an assumed name.
5. In the submissions for the offender it was noted that cases on extracurial or additional punishment do not draw a distinction on whether the offender had been the author of his own misfortune. That, it was submitted, must be a common factor in almost every case that is being considered.
6. It was also submitted for the offender that it is pure speculation as to whether he might be able to continue with his career in the future.
7. Notwithstanding the matters relied upon by the Crown, I consider that there is a very real prospect that the offender will suffer the consequences of his criminal offending to future employment in what is today a global society with digital communications in which the background reputation of persons can be readily ascertained. It is not to be assumed that reputation within the business community is confined necessarily to this country. Having said that, however, I accept the point made by the Crown in submissions having regard to the offender's ability to obtain post-offending employment.
8. I consider, accordingly, that some weight should be given to the fact as to his likely disqualification from managing an Australian corporation and the real prospect that he will suffer from the loss of his career and professional reputation. Accordingly, these matters are to be taken into account. I do so and make allowance for those factors in determining the sentences to be imposed.
9. I do not consider this is a case in which there is any evidence or basis upon which the matter of adverse publicity can be taken into account as there are no exceptional circumstances in that regard established.

Principles of Totality: Issues of Concurrency and Accumulation

1. In relation to sentencing, by reason of the fact that I am sentencing the offender for multiple offences, I must proceeding in accordance with the principle of totality in particular those stated by the High Court in Pearce v The Queen (1998) 194 CLR 610 at 624. Additionally, in terms of determining issues of accumulation and concurrency, relevant principles have been established and were expressed in the decision of the Court of Criminal appeal in Chayadi v The Crown (2007) 168 A Crim R 41, in particular, in the judgment of Howie J in that case.
2. It is necessary that an appropriate sentence be determined, first, for each offence and questions of accumulation and concurrency are then to be determined. It is well accepted that totality is a most important consideration in the sentencing exercise.
3. In order to properly give effect to the principle of totality in respect of the offender's criminality I consider that there must be some accumulation of sentences. The sentences to be imposed must be assessed, in addition to other matters that I have discussed, in the context of a case in which the offender was a true insider and his offending involved, in relation to both Charges 1 and 2, as I have said, involved gross breaches of trust and confidentiality in the use of inside information of high quality for his own personal benefit.
4. Whilst it is true that the offending only took place over a period of approximately two weeks, the fact is that his offending was made up of a great many individual contraventions, as I have said, committed with actual knowledge as to their illegality. The offender's trading, in other words, is to be distinguished, in my view, from cases in which, on the basis of some aberration or lack of judgment on one particular occasion, a contravention of the insider trading provisions has occurred. I have also taken into account the subjective matters to which I have earlier made mention.

The Provisions of Section 17A Crimes Act 1914

1. In accordance with the provisions of s 17A of the Crimes Act, a sentence of imprisonment on a person for a federal offence shall not be imposed unless the court, having considered all other available sentences, is satisfied that no other sentence is appropriate in all the circumstances of the case.
2. On the basis of the Agreed Statement of Facts, the conclusions and findings to which I have referred, I am well satisfied that the seriousness of the offences are such that no other sentence is appropriate and indeed the submission for the offender properly acknowledge that fact.
3. In those circumstances the length of the term of the sentence must be fixed without regard to how the sentence is to be served. Once the sentences have been determined, the Court is to consider whether any alternative to imprisonment is available.
4. In accordance with s 19AB(1) of the Crimes Act 1914 (Cth), where a court imposes federal sentences that, in the aggregate exceed 3 years, a single non-parole period is to be fixed.
5. In determining sentence I consider that the objective seriousness of the rolled-up charge, Charge 2 exceeds that of Charge 1 including the additional matters on the schedule in respect of Charge 1. In that respect I have assessed the objective seriousness of all the insider trading offences and taken into account the level of personal investment as well as the profit that the offender made from the offences.
6. In respect of Charge 1 as against Charge 2, the level of personal expenditure and profit in relation to Charge 1 exceeded that of Charge 2. However, the offending with respect to Charge 2 represents, in my opinion, a serious and continuing disregard by the offender of the law and of his fiduciary and other trust obligations, in particular aggravated by the extent to which he was the dominant party. The use of a loan, as I have indicated, in relation to the $US1 million loan obtained in order to finance the trading, the subject of Charge 2 was a serious aggravating factor. As to a case where a number of persons working in concert for an alleged illegal purpose, I refer to the observations in The DPP v Fabriczy (2010) 30 VR 632 wherein it was stated: "The element of concert makes the offence of conspiracy more serious than if an individual were acting alone to plan and commit the offence, as the likelihood of the crime occurring is increased by the involvement of multiple participants making a commitment to each other to do so. There is said to be a 'dangerousness' inherent in the plotting, 'either because several may achieve what an individual would find difficult or impossible, or because other criminal plans may emerge from the group'." (14-16)
7. It is accepted, of course, that the offender is to be sentenced for a joint commission offence and not a conspiracy but nonetheless similar considerations, as the Crown submitted, apply.
8. I proceed to determine the sentences in respect of Charges 1 and 2. I will then proceed to determine the single non-parole period in accordance with the provisions of s 19AB(1)(d). In determining the non-parole and parole periods I am required, of course, to proceed in accordance with the principles enunciated by the High Court in Hili v Jones (2010) 242 CLR 520 at [34]-[40].

Sentences

1. Hui Xiao, is convicted of the offences, Charges 1 and 2.
2. In respect of Charge 1, taking into account the additional matters on the Schedule pursuant to s 16A(2) of the Crimes Act, I sentence you to a term of imprisonment of 6 years commencing 12 January 2014 and to expire on 11 January 2020 consisting of a non-parole period of 3 years 9 months expiring on 11 October 2017.
3. In respect of Charge 2, I sentence you to a term of imprisonment of 7 years commencing on 12 April 2015 and to expire on 11 April 2022, consisting of a non-parole period of 4 years 3 months to commence on 12 April 2015 and to expire on 11 July 2019.
4. An effective overall sentence in respect of Charges 1 and 2 accordingly is a term of imprisonment of 8 years 3 months commencing on 12 January 2014 and expiring on 11 April 2022 with an effective overall non-parole period of 5 years 6 months.
5. In respect of Charge 1 and Charge 2, I determine a single non‑parole period of 5 years 6 months commencing 12 January 2014 and expiring on 11 July 2019.
6. The first date upon which you will be eligible for parole, accordingly, will be 11 July 2019.

Schedule ANNEXURE A DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 15 March 2016