Following the 2018 announcement that Sigma would no longer be the main supplier to Chemist Warehouse, a general manager at Sigma has now been charged with insider trading
The Australian Securities and Investments Commission has released a statement about Michael John Story, of Elwood, Victoria, a general manager employed by Sigma Healthcare Limited.
Mr Story has been charged with two counts of insider trading.
In 2018, Sigma was the main supplier to the Chemist Warehouse Group, and on 2 July of that year. Sigma publicly announced that the wholesale supply agreement between it and the Chemist Warehouse Group would cease on 30 June 2019.
Following this announcement, Sigma shares closed 40% lower compared to the previous day, notes ASIC.
“Mr Story disposed of 645,047 Sigma shares on 9 May 2018 and a further 250,000 Sigma shares on 21 June 2018,” says ASIC.
“ASIC alleges that, at the time he disposed of the two tranches of Sigma shares, Mr Story was in possession of inside information relating to the status of negotiations to renew the wholesale supply agreement between Sigma and CWG.”
On Friday, Sigma issued a statement saying that it was aware of the commencement of Court proceedings.
“Whilst Sigma is not party to the proceeding, we are taking this matter seriously and will continue to monitor the court process,” the wholesaler said.
“Sigma has been assisting ASIC with its enquiries, and no other Sigma employees are under investigation in relation to this matter.
“Sigma is committed to upholding high standards in corporate governance.
“Michael remains an employee of Sigma at this point in time. Sigma will make no further comment pending the outcome of the Court proceedings.”
ASIC notes that at the time of the alleged offences, each of the charges of insider trading contrary to section 1043A of the Corporations Act 2001 carried a maximum penalty of 10 years’ imprisonment.
In March 2019 the maximum penalty for insider trading was increased to 15 years imprisonment.
The matter is being prosecuted by the Commonwealth Director of Public Prosecutions.
The matter has been adjourned to a committal mention hearing in the Melbourne Magistrates Court on 18 December 2020 at 10am.