The Possession and Materiality of Information in Insider Trading Cases

Dr Stuart Fysh was convicted of two counts of insider trading in November 2012, but in July 2013 the New South Wales Court of Criminal Appeal quashed his conviction, with the reasons for that decision published in November 2013 as Fysh v The Queen [2013] NSWCCA 284. The court's decision in this case turned on two primary issues" whether it is necessary to prove that an accused insider trader possessed all of the information alleged to be in his or her possession, and how the materiality of information is to be assessed. In deciding this appeal, the court made pronouncements on issues highly relevant to insider trading cases" the nature of the possession of information, the impact of future share price movements on the assessment of the materiality of information, and whether the materiality of information should be considered to be a matter of "common sense" or the subject of expert evidence. These issues will be analysed and discussed in this article in the context of previous insider trading cases and the current focus on insider trading by the Australian Securities and Investments Commission.