Perth entrepreneur Dean Scook has been sentenced to three years in prison after being convicted in the District Court over a market deception scheme involving shares in a junior explorer in 1998.
Perth entrepreneur Dean Scook has been sentenced to three years in prison after being convicted in the District Court over a market deception scheme involving shares in a junior explorer in 1998.
Mr Scook, 56, was found guilty of 158 charges of creating, or doing something that was likely to create, a false or misleading appearance of active trading in Intrepid Mining Corporation NL during January and February 1998.
Intrepid was later known as Cobra Resources NL and is now called Resource Mining Corporation Ltd, a minerals exploration company focused on exploration for nickel, cobalt, copper platinum group metals and iron ore.
Mr Scook used multiple accounts through several brokers as well as a pool of traders to effect the trading in Intrepid. Mr Scook was able to orchestrate the trading by monitoring the market in real time. Unbeknownst to the brokers and the pool of traders, Mr Scook would arrange both sides of the transaction in order for a trade to be executed. By trading in this manner, Mr Scook was responsible for over 50 per cent of the volume of reported trades in Intrepid shares in the period, including over 80 per cent of reported trades on some days.
Mr Scook's Sydney stockbroker Jeffrey Braysich was also sentenced to one year imprisonment to be suspended on entering into a personal recognisance of $5,000 surety to be of good behaviour for two years. Mr Braysich was also fined $24,000.
Mr Braysich, 46, was found guilty of 25 counts of creating a false or misleading appearance of active trading in Intrepid during February 1998.
The full text of an ASIC announcement is pasted below
Two men were today sentenced in the Perth District Court for their roles in a market rigging case investigated by the Australian Securities and Investments Commission (ASIC).
Mr Dean Scook, a Perth entrepreneur, was sentenced to three years imprisonment to be released after serving 14 months upon giving a personal recognisance of $5,000 surety to be of good behaviour for the balance of the term.
Mr Jeffrey Braysich, a former Sydney stockbroker, was sentenced to one year imprisonment to be suspended on entering into a personal recognisance of $5,000 surety to be of good behaviour for two years. Mr Braysich was also fined $24,000.
On Saturday 10 November 2007, a jury found both men guilty of market rigging.
Mr Scook, 56, was found guilty of 158 charges of creating, or doing something that was likely to create, a false or misleading appearance of active trading in Intrepid Mining Corporation NL (Intrepid) during January and February 1998.
Intrepid was later known as Cobra Resources NL and is now called Resource Mining Corporation Limited, a minerals exploration company focused on exploration for nickel, cobalt, copper platinum group metals and iron ore.
Mr Braysich, 46, was found guilty of 25 counts of creating a false or misleading appearance of active trading in Intrepid during February 1998.
Mr Scook used multiple accounts through several brokers as well as a pool of traders to effect the trading in Intrepid. Mr Scook was able to orchestrate the trading by monitoring the market in real time. Unbeknownst to the brokers and the pool of traders, Mr Scook would arrange both sides of the transaction in order for a trade to be executed. By trading in this manner, Mr Scook was responsible for over 50 per cent of the volume of reported trades in Intrepid shares in the period, including over 80 per cent of reported trades on some days.
Some of the charges against Mr Scook related to both wash trades and matched orders. Wash trades are transactions that involve no change in beneficial ownership of the shares traded. Matched orders are orders arranged between associated parties to buy and sell shares that substantially match in price and volume. The law, then and now, stipulates that individuals who engage in such conduct are deemed to have created a false or misleading appearance of active trading which is a criminal offence.
The charges against Mr Braysich all related to trading between two accounts that did not involve a change in beneficial ownership of the shares. Mr Braysich was Mr Scook's broker at Paul Morgan Securities.
In sentencing Mr Scook, His Honour Judge Wisbey said, 'Offences of this type are difficult to detect and prosecute and penalties must reflect a positive concern for the integrity of the equities market which is so important having regard to its place in the national economy.
'It is not possible to determine its consequences to the market generally, but it is probable that a number of innocent investors would have been disadvantaged. It amounted to a carefully considered and executed deception that necessitated repetitive wrong doing for its effectiveness.'
ASIC's Executive Director of Enforcement, Ms Jan Redfern said while cases involving market rigging are particularly difficult to detect and prosecute, today's outcome should act as a warning to others who may be tempted to undermine the integrity of the stockmarket.
'Market rigging offences are extremely destructive in that they strike at the very heart of confidence in Australian's financial markets. In prosecuting such matters, ASIC seeks to ensure that investors can trade in a well-regulated market which is transparent and reflects genuine forces of supply and demand.'
ASIC Chairman, Mr Tony D'Aloisio has identified the need to maintain and improve confidence and integrity in Australia's capital markets as a priority for ASIC. This initiative will use new investigative techniques to pursue offences such as market manipulation.
The charges were laid following a referral from the Australian Stock Exchange (now the Australian Securities Exchange).
The matter was prosecuted by the Commonwealth Director of Public Prosecutions.
