Gunns Executive Guilty of Insider Trading

A former executive of the timber company Gunns, is most likely going to jail after entering a guilty plea on two counts of insider trading.

Mr. John Gay, who was the chairman of Gunns between 2002 to 2010, had been successful in selling more than 3.4 million shares in 2009. But two months following this, Gunns’ shares fell to almost 98%.

Gunns operations folded by September of last year, leaving a debt of $560 million.

The Australian Securities and Investments Commission (ASIC) has charged Mr. Gay in court based on their findings and investigations. Mr. Gay initially entered a plea of not guilty but last Monday, the defendant changed his plea before the courts in Laucenston and admitted to the guilt.

By pleading this, Mr. Gay is able to make an agreement on what the penalties are. Mr. Gay’s sentence, however, rests on the judge of the case. But with ASIC winning this case, it speaks much about the integrity of the market.

It’s possible Mr. Gay would face imprisonment for five years and would also be fined $220,000. These charges were laid out before the changes to the law were set, punishing the guilty of ten years maximum prison time.

The win or ASIC was significant according to an expert, Professor Ian Ramsay, who said, “In the past, ASIC has had enormous difficulty bringing cases forward, and brought cases fairly infrequently.”

Mr. Gay will be back in court by next week to receive his sentence.