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Within days of biotech company Sirtex Medical Limited delisting from the ASX following its takeover from China's CDH Investments for $1.9 billion, former CEO Gilman Edwin Wong has been charged with insider trading.
The Australian Securities and Investments Commission (ASIC) alleges Wong, who was also a director of the radioactive treatment device company, was in possession of inside information about Sirtex's sales when he sold 74,698 shares on 26 October 2016.
Wong appeared yesterday at the Downing Central Local Court in Sydney charged with one count of insider trading under the Corporations Act and the matter was adjourned to 20 November 2018.
The matter is being prosecuted by the Commonwealth Director of Public Prosecutions, and ASIC highlighted the maximum penalty for an insider trading offence was 10 years' imprisonment.
The development comes amidst a shareholder class action, funded by IMF Bentham and conducted by Maurice Blackburn Lawyers, against Sirtex and Wong's alleged conduct.
"The claims will allege that the FY17 Dose Sales Growth Guidance was misleading and lacked a reasonable basis, that Sirtex was in breach of its continuous disclosure obligations under the Corporations Act 2001 (Cth) during the Relevant Period and that Sirtex misled the market in relation to its former CEO's alleged non-compliance with Sirtex's corporate governance policies," IMF Bentham said in an overview of the case.
Even though Sirtex announced double-digit growth would continue in FY17 and that claim was reiterated by Wong at the company's AGM, the day after the meeting he sold the shares for a value of almost $2.14 million.
In December, Sirtex then lowered its worldwide first half sales growth expectations to 4-6 per cent, sending the share price plummeting down 37 per cent.
It is estimated that Wong's early sale of those shares would have saved him around $1 million.
"On 16 December 2016, Sirtex announced that its Board had appointed lawyers to investigate Mr Wong's share sale in October. Mr Wong voluntarily stood down during the investigation. Mr Wong's employment was terminated on 13 January 2017 following receipt of the lawyers' report," IMF Bentham said.
In September last year, Sirtex paid a penalty of $100,000 after ASIC issued an infringement notice for the company's alleged failure to comply with its continuous disclosure obligations.
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