CA ANZ kicks out member found guilty of insider trading

“The offending is serious and fundamentally compromises the Member’s fitness to practice accountancy and aggravates its tendency to bring the profession into disrepute,” disciplinary tribunal documents read.

“The offence of insider trading when carried out deliberately and with concealment is dishonest. Dishonest behaviour is the antithesis of what the profession stands for and undermines his integrity as well as damaging the standing of the profession.”

Young had worked as a treasury accountant at Heartland Bank Limited (HBL), a subsidiary of Heartland Group Holdings (HGH), which was listed on the NZX.

His role gave him access to confidential and sensitive financial records of both HBL and HGH. In March 2020, HGH announced that its net profit after tax was likely to be at the upper end of $77 to $80 million, according to disciplinary documents.

In July, Young accessed HGH documents that confirmed that the company’s net profit was likely to be towards the upper end of the forecast – information that was not made available to the market until September.

He passed on this insider information to a second party, Pritesh Patel, knowing that he would likely trade in HGH shares. Patel acquired those shares in August 2020. This formed the basis of Young’s first insider trading charge.

From July to September 2020, Young accessed additional HGH financial records that similarly confirmed the company’s net profit after tax was at the upper end of the $77 to $80 million range. This information, which the court deemed to be material, was not made public until 17 September.

Before the records were made public, Young transferred $600,000 to his sister and instructed her to acquire HGH shares. She purchased these between 25 and 27 August. He then instructed her to place a sell order in September, giving her a cover story to use if anyone questioned why she was selling her shares.

Half an hour after HGH announced its results on 17 September, Young’s sister sold the shares, making $11,241 in illicit profit, which was transferred back to Young’s bank account.

“The convictions are serious criminal convictions in which the Member deliberately revealed inside information of HGH knowing those he supplied it to would trade on that information,” CA ANZ disciplinary documents read. 

“It was clear he knew better as he provided his sister an explanation to give to the Financial Markets Authority should they ask questions about her trading.”

Between January and February 2021, Young accessed HGH's financial records indicating that the company’s net profit for the half-year ending 30 June 2021 would be 12 per cent higher than in the previous half-year.

Documents also indicated that HGH would likely pay a higher dividend than the previous full year, information that was not generally available to the market. Young encouraged a second party, Ms Tay, to wait until after the company’s half-year results came out before cashing in her shares.

He had previously advised her to buy more HGH shares as they would be “over $2 soon,” and later told her there would be a good half-year profit and a 4-cent-per-share half-year dividend. Young’s communications with Tay formed the basis of the third insider trading charge.

In coming to its decision, CA ANZ’s disciplinary tribunal acknowledged mitigating factors, including Young’s cooperation with the Professional Conduct Committee. However, this was not enough to sway its decision to terminate his membership.

“His acceptance of his conduct, insight into the seriousness of it, and cooperation with the PCC, mitigates his offending sufficiently to avoid the imposition of a fine,” disciplinary documents read.

“However, he acted deliberately, dishonestly, and in breach of his fundamental duties of confidentiality and fidelity. He is not of suitable character to retain his membership.”

Young was also ordered to pay $5,500 in costs.