By Colin Kruger
The former chief executive of cancer treatment group Sirtex, Gilman Wong, has pleaded guilty to one charge of insider trading relating to a $2.1 million share sale in 2016.
Mr Wong faces up to ten years' imprisonment after he pleaded guilty in the Downing Centre Local Court in Sydney on Monday to selling 74,698 Sirtex shares for more than $28 each on October 26, 2016, when he was in possession of inside information. The deal represented more than one quarter of his Sirtex shareholding.
Former Sirtex Medical boss, Gilman Wong, has pleaded guilty to insider trading. Credit: Brianne Makin
A week after notifying the sharemarket of the sale, Mr Wong issued a statement saying the shares were offloaded to cover a tax liability after the vesting of rights in the company's shares.
Mr Wong sold the shares one day after the company reaffirmed its 2017 financial year forecast for "double-digit dose sales" growth to investors at its October annual meeting.
In December that year, Sirtex lowered its guidance to predict growth of 5 to 11 per cent, which triggered a share price plunge of 37 per cent to $16.
The Sirtex board terminated Mr Wong's employment in January 2017 as the Australian Securities and Investments Commission (ASIC) began an investigation into his trading.
"It was, understandably, a very difficult decision for many of us on the board to make, at a personal level, having worked closely with Gilman over the past 12 years. However, it was a decision that had to be made and we made it," Sirtex chairman Richard Hill told investors at the 2017 shareholder meeting.
ASIC had also hit Sirtex with a fine of $100,000 that year following an investigation that found the company was in breach of its continuous disclosure obligations. There was no admission of liability by Sirtex.
The stock rout led to a shareholder class action, which was reportedly settled last month for $40 million.
Sirtex was sold to a Chinese consortium last year in a $1.9 billion deal that valued it at $33.60 a share.
The takeover hit an unexpected hurdle when Justice Bernard Murphy issued orders to ensure that Sirtex's new owners, CDH Genetech and China Grand Pharmaceutical and Healthcare Holdings, retain $80 million in case the class action was successful.
"I consider there is a reasonable prospect that the applicants’ case will succeed and Sirtex may be required to pay substantial damages, and I am persuaded there is a danger that Sirtex’s assets will be removed from the jurisdiction," Justice Murphy said.
Mr Wong was committed to sentencing on a date to be fixed.
Sirtex was contacted for comment.