The Australian Securities and Investments Commission (ASIC) has put a charge on the former chief executive of Sirtex Medical’s, Gilman Wong with one count of insider trading. ASIC, the regulator last year was investigating the events at Sirtex that had taken during the second half of the 2016 calendar year. ASIC had put the allegation that former CEO Mr Wong was in possession of inside information related with Sirtex’s sales, when he sold 74,698 shares in Sirtex on 26 October, 2016.
The matter was then adjourned and Mr Wong then had apparently sold his shares for the payment of a tax liability, which he could now get a maximum prison sentence of 10 years if proved guilty. The matter is being prosecuted by the Commonwealth Director of Public Prosecutions. Meanwhile, Sirtex Medical had terminated Mr Wong from his employment in January 2017 after legal adviser Watson Mangioni had given a confidential report that includes concerns related with the trading of company shares by Mr Wong. The questions about Mr Wong were first raised when he had sold $2.1m worth of shares on October 26, 2016 at an average price of $28.48. This was the day after when Sirtex sales update was questioned by the ASX for allegedly “imprecise terms”. The ASX then returned back to Sirtex on December 2, 2016 and was told that the forecast for “double-digit growth guidance for dose sales” still holds. However, on December 9, 2016, Sirtex had downgraded its growth guidance for dose sales to be between 5 per cent and 11 per cent. This earnings downgrade was a shock and with this result in December, stock plunged by 37 per cent. It is projected that Mr Wong saved $1 million by getting out early. Meanwhile, the investors also launched legal action against the company after the earnings downgrade, which Sirtex has said that it would “vigorously defend”, for alleged misleading and deceptive conduct related to sales growth forecasts. [optin-monster-shortcode id=”wxhmli4jjedneglg1trq”]
Furthermore, the statement of claim was issued related with the case that had alleged regarding the breaches by the company of its continuous obligations and alleged misleading and deceptive conduct. Sirtex was previously fined an amount of about $100,000 by ASIC in September 2017 when they found it was in breach of its continuous disclosure obligations the prior year. Additionally, a second class action was started in December 2017. Both class actions have since been into consolidation to a single proceeding. Sirtex had told investors in August that the company expects that the consolidation proceeding would be set down for hearing in April 2019. On the other hand, Sirtex is now sold to Chinese group CDH Investments in a $1.9 billion transaction, and got de-listed from the ASX lately.
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