A Sigma Healthcare Ltd (ASX: SIG) executive has been charged with 2 counts of insider trading.
Sigma, a pharmaceutical wholesaler, was supplying the major retail chain Chemist Warehouse in 2018.
However, on 2 July 2018, Sigma announced to the ASX that agreement could not be reached in renewing the supply deal. The share price immediately sunk 40% that day.
Sigma general manager Michael John Story of Elwood, Victoria is alleged to have sold off his shares before this announcement.
The Australian Securities and Investments Commission alleges Story knew how the negotiations between Sigma and Chemist Warehouse were going when he disposed of his stocks.
Story sold off 645,047 Sigma shares on 9 May 2018 and another 250,000 on 21 June.
The two charges of insider trading are violations of section 1043A of the Corporations Act 2001.
Although the current maximum penalty for such a breach is 15 years’ jail, at the time of Story’s alleged offences it was 10 years.
Commonwealth Director of Public Prosecutions is now in charge of the case, which will next be heard at a committal mention hearing at Melbourne Magistrates Court on 18 December.
Sigma shares dropped 0.93% to 53 cents near close of trade this afternoon.
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Motley Fool contributor Tony Yoo has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.
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