11 Sep 2018

Man on trial for insider trading case an opportunist, says Crown

5:53 pm on 11 September 2018

The Crown says the first person to go on trial for insider trading in this country was no Wolf of Wall Street.

Hamish Mark Sansom at the High Court in Auckland.

Hamish Mark Sansom at the High Court in Auckland. Photo: NZ Herald

Instead it said Hamish Mark Sansom was an opportunist who sold his shares in a road transport software company after a getting a tip-off from a friend.

But Mr Sansom's lawyers said he was able to discover by looking at the numbers that EROAD wasn't doing as well as expected in the American market.

In his opening address to the jury at the High Court in Auckland today, Crown prosecutor Mark Lowery said Mr Sansom received a text message from his friend and former colleague who worked for EROAD.

Mr Sansom owned shares in EROAD - which sold software that allowed trucking companies to buy diesel road user charges electronically and had recently broken into the US market.

In May 2015 Mr Sansom got the following text message from his friend: "US sales not doing too well, time to sell up? Confidential, obviously."

The message was accompanied by an image of a confidential internal company report that Mr Sansom's friend was working on.

Two minutes later, Mr Sansom replied with: "You're a bad boy ... but thanks."

A short time later, Mr Sansom said "Was going to sell down significantly anyway."

Mr Lowery said Mr Sansom set about getting rid of his shares. It was complicated by the fact the shares were held by Mr Sansom's trust but he drove over town to hand deliver documents to speed up the process.

Mr Sansom sold 15,000 shares for $51,000.

"A few days after that sale, the company announced to the market what a company insider had told Mr Sansom a few days earlier, that part of its business wasn't doing too well. The announcement caused the share price value to drop, so suddenly the shares were worth less than they were when Mr Sansom traded."

They were worth a lot less.

"On that day its share price dropped 10 percent and then over the next week it was a total of 20 percent and that was its largest fall since the company went public."

Mr Lowery said the trial came down to the text messages between Mr Sansom and his insider contact.

"The Crown is not going to attempt to paint Mr Sansom as some kind of criminal mastermind or the Wolf of Wall Street - he's not. His offending was unsophisticated and it was opportunistic rather than pre-meditated."

In short, Mr Lowery said Mr Sansom was a cheat.

"Insider trading is cheating, pure and simple. It cheats other members of the investing public and not just stock traders who sit in high-rise buildings and wear shirts and cuff-links to work but everyday New Zealanders who operate in an economy that relies on the existence of fair markets, particularly those of you who might have Kiwisaver accounts which tend to invest in sharemarkets," Mr Lowery said.

But Mr Sansom's lawyer David Jones QC said the case was not so simple and encouraged them to look at the evidence objectively.

He said Mr Sansom was able to work out the numbers for himself and didn't need any tip-offs to know the company wasn't performing as well in the US as expected.

"If you looked at the words, the spin, you could get taken in but if you look at the numbers, the hard facts, you could see that things were not going well at all."

Mr Jones said the numbers were published at the company's AGM - well before what the Crown describe as the tip-off or the company's announcement.

"The FMA [Financial Markets Authority] want his head on a plate because they want a trophy. This was their first case under the new law and so they want him. And so they're doing whatever they can to funnel the information that they want you to look at into something that is going to suit their case."

He said Mr Sansom had worked it out himself, before the so-called tip-off and was going to sell anyway.

"That is not a crime. That is somebody simply using independent thought, and experience and expertise and working something out for themselves. That is not a criminal offence and should never be."

The trial, before Justice Fitzgerald and a jury, has been set down for two weeks.