Rodney Forrest insider trading: lawyers seek no jail for fund manager

A Sydney fund manager’s ‘spontaneous’ decision to photograph secret takeover documents has become ASIC’s first major insider trading unit outcome.

Sydney based fund manager Rodney Forrest should not spend one night in jail despite pleading guilty to insider trading, his lawyers claim.

The 40-year-old admitted buying $2.6m worth of Platinum Asset Management shares between August and September last year, knowing Regal Partners would lob a takeover offer for the investment manager.

He obtained that information by accessing confidential emails on Regal Partners chairman Michael Cole’s computer, and taking a picture of Regal’s takeover pitch deck for Platinum.

It’s understood Forrest was an acquaintance of Mr Cole and was working from office space belonging to Mr Cole.

Forrest’s lawyers argued this was a “spontaneous” decision and “isolated lapse” in judgment, while prosecutors argued the offending was “sophisticated” and “calculated” and are pushing for time spent in jail.

Forrest also told a journalist at The Australian Financial Review’s Street Talk Column about the plans, knowing a story would be published and hoping it would increase the company’s share price to drive up his profits. The trades left him with a profit of about $309,000 (which he later surrendered).

The takeover fell through, but Forrest was charged with three breaches of the Corporations Act by the Australian Securities and Investments Commission last year, and he faces up to 15 years in prison.

He also procured two other men to buy Platinum shares.

The case marks the first outcome for ASIC’s new insider trading busting unit. It is also one of the first matters to be referred to the Federal Court’s new criminal jurisdiction, following an earlier hearing at Sydney’s local court where he first entered guilty pleas.

During Forrest’s sentencing hearing on Monday in Sydney, his barrister Sophie Callan SC said a jail sentence of less than three years is “available” for the court to consider.

But Ms Callan urged the court to consider imposing a term of imprisonment with immediate release (a wholly suspended sentence) or an intensive corrections order.

“We say the pertinent factors to be considered … is Mr Forrest’s contrition, remorse and co-operation,” Ms Callan said.

She said the value of Forrest’s early guilty plea – which Ms Callan said included saving ASIC “considerable” time and resources to prove the offences – could be worth a 25 per cent discount. He has suffered “humiliation” as a result of his offending, Ms Callan said.

But for the Commonwealth Director of Public Prosecutions, barrister Michelle England SC, argued Forrest understood what he was doing was illegal.

“It was a significant amount of money that had a clear impact on the integrity of the market. For those reasons … (the prosecution submits) the offending was above mid-range and that it was serious offending,” Ms England said.

“The motivation for this offending was greed. (The) offender acquired shares through his Forrest CommSec account,” she told the court.

As well, Ms England said Forrest purposefully communicated with a Financial Review journalist in person to avoid a paper trail.

“He communicated with the journalist from the Australian Financial Review numerous times in relation to Platinum over a number of days anticipating that the journalist would publish an article about the company,” she said.

“That itself led to the possession of additional inside information, that is the pending publicity which he had been instrumental in creating.”

Ms England said: “that dealing with the journalist and the creation of additional inside information was intended to increase the profits from the inside trading”.

Ms England said Platinum’s share price jumped by 12.3 per cent after a formal announcement was made by Regal Partners about the proposal on September 17, 2024, and after the Financial Review article the day before on September 16.

The court heard Forrest felt pressure to succeed, including from his family. He has a wife and two children, aged five and eight.

Raised in the Blue Mountains in regional NSW, Forrest was raised in an “intact family unit”, but his father was a heavy drinker who subjected the family to verbal and physical abuse.

The anxiety to succeed, stemming from his childhood, left him to forge a successful career in funds management for 20 years, including by gaining the respect of regal’s Mr Cole.

Federal Court judge Robert Bromwich reserved his decision on sentencing Forrest, which is set to be delivered in January.

Forrest was remanded on bail.

Originally published as Rodney Forrest insider trading: lawyers seek no jail for fund manager