Simon Hannes
Encyclopedia
Simon Gautier Hannes was an Australian senior executive of Macquarie Bank convicted of insider trading
over call option
s bought prior to the takeover
of TNT
(to whom Macquarie was an advisor) by the Dutch postal service (KPN) in 1996.
The options were bought in the name of Mark Booth and cost about $90,000. After the takeover bid they were worth over $2 million. Hannes vehemently denied he was this Booth, or that he had inside information anyway. The prosecution had good indirect evidence of both, which the jury
accepted at an initial trial
and again at a retrial ordered on appeal
.
Hannes was also convicted of offences under the Financial Transaction Reports Act 1988 (FTR) relating to the way he had split cash transactions at multiple bank branches to stay under the AUSTRAC reporting threshold of $10,000.
Hannes sentence at the trial in 1999 was 2 years and 2 months imprisonment
and $110,000 fines. He served 15½ months of an 18 month non-parole period before granted the retrial. At the retrial in 2002 the sentence was 2 years 6 months and $100,000 fines, with a non-parole period of 20 months, making a further 4½ months to serve.
(now part of TNT N.V.
) was an Australian transport and logistics company with significant operations in Europe. It was a client of investment bank Macquarie Bank and in May 1996 TNT and their Macquarie advisors, from the Corporate Advisory Division of Macquarie Corporate Finance (MCF), had a meeting in Hong Kong
with Royal PTT Nederland NV (KPN), the Dutch postal service, concerning a possible friendly takeover
of TNT by KPN. Back in Sydney
, the Macquarie advisors put together what they called "project Tennis", and those in this "Tennis team" were to keep the project confidential.
Hannes was an executive director of MCF, but not in the team, and so did not know directly of the proposed transaction. But he became aware something was happening, since in July 1996,
From 1 August 1996 Hannes took permanent leave from the bank, but kept keys to the MCF offices, since he would still be doing work for at least one client. Before and after taking leave, Hannes made a number of late night visits, the prosecution would allege that on those occasions he looked at the work of project Tennis.
On 2 September 1996 TNT announced it has made an agreement, with certain conditions, to sell its stake in Air New Zealand
to Ansett Airlines. One of the things the prosecution would allege Hannes learnt from project Tennis was that KPN wasn't interested in TNT's shares in Air New Zealand, and that the prospect of a takeover would be greatly increased if TNT could sell them. It seemed that with this impediment removed Hannes took action, two days later.
On 5 September 1996, one "Mark Booth" rented a mailbox at Mail Boxes Etc in Mosman
, subsequently used for correspondence and grandly called "Suite 140, 656 Military Road".
In the later trial, the court accepted the prosecution's allegation that this Booth was Hannes and everything done as Booth was done by Hannes. For the description below the distinction will be preserved, to show where the identification could (or could not) be made. The name "M. Booth" was apparently from Hannes' sister Mignon Booth (her married name). Hannes said in a police interview about one of the bank cheque applications "M. Booth" that it was to have been "in the name of my sister." But there was no suggestion his sister was involved in any way.
On 6 September 1996, Hannes withdrew cash of $10,000, $10,000 and $20,000 from his CBA account, each withdrawal at a different branch. All were over the AUSTRAC cash transactions reporting threshold. The first two were reported electronically, without Hannes' knowledge. At the third branch it was done manually on a form the teller asked Hannes to sign. It seemed only at that point did he learn of that rule.
That same day "Booth" obtained a bank cheque for $9,000, paid with cash, for stock brokers Ord Minnett and deposited with them. It seemed money that had started at Ord Minnett was going back there, under a different name.
On 9 September 1996, Hannes made further cash withdrawals from his CBA account, this time $9,900, $6000, and four of $9,000, again each from a different branch. This brought the total withdrawn to $91,900.
That same day Booth obtained nine bank cheques, paid with cash, for Ord Minnett and deposited there. Those cheques were obtained all at different bank branches, of the CBA, NAB
, ANZ and Westpac
. Some of those branches were just metres away from each other. There were eight cheques of $9,000 and one of $9,900. This brought the total deposited to $90,900.
On 17 September 1996, Booth phoned Ord Minnet and spoke to broker Andrew Staehli. Booth identified himself as a marketing consultant from the UK
staying at the InterContinental Hotel. (The hotel later gave evidence they'd had no guest of that name.)
Booth got a quote for TNT call option
s expiring November with a strike price
of $2.00. The quote was between 1c and 2c per share, since TNT was then trading for just under $1.60 and there was only 2 months to expiry. Staehli advised this would be a risky trade and required written instructions, plus the usual options client agreement and CHESS
sponsorship agreement. Booth arranged to pick up those documents in person from the Ord Minnett office.
On the morning of 18 September 1996 the completed documents were on Staehli's desk. Booth had come to the office, but Staehli never met him in person (and therefore could not subsequently identify him). The options agreement was witnessed by one "Alexi Voltraint" of 52 Railway Rd, Petersham
. It later turned out there was no such person, but at number 51 was Patricia Myers whom Hannes had met at a book club meeting that month.
Booth's written instruction was to buy November $2.00 TNT call options for up to 2c each, as many as could be had (including brokerage
) for the money on account. Staehli did this that day the 18th and then the 19th at prices of 1.5c or 2c per share, totalling about 5,000 options contracts (on 1,000 shares each).
On 19 September 1996 Booth opened a voicemail
service at Voicemail National in Surry Hills
. He phoned Staehli to give him that number, and Staehli advised the options had been bought and $1,500 remained in the account. It apparently annoyed Booth that not all the money had been applied.
On 2 October 1996 KPN announced its takeover bid, for $2.45 per share. This was generally regarded as rather high at the time, some commentators even suggested the Dutch had miscalculated the exchange rate
or something, but the TNT business in Europe
was highly desirable for them and the bid had the backing of the TNT board.
Staehli talked to Booth that afternoon, telling him he'd become a millionaire
. The options were now worth roughly the difference between the strike $2.00 and the bid $2.45, an amount over $2 million. On 3 October 1996 Staehli received a letter from Booth instructing him to hold the position until 4 November 1996 in case a rival bidder made a higher offer, then sell.
In November 1996 Booth fax
ed instructions to Staehli directing the firm to pay monies under the direction of the ASC so the investors he had bought from wouldn't suffer losses. Maybe Hannes realized he was in trouble and hoped to extricate himself. In any case such payments were in fact made, with the writers of the options compensated.
The ASC investigated many people from Macquarie, TNT and KPN who might have been Booth, using good old-fashioned perseverance. They also used NetMap software developed by NetMap Analytics. NetMap was designed to look at large data sets for unusual links between people or groups in their communications or financial dealings, to identify possible wrongdoing. After a three week run it proposed several people, of whom Hannes was one.
On 17 January 1997 a search warrant was executed at Hannes home and documents, his computer, an anorak
, a black bag and glasses were seized. The anorak and bag were similar to ones in bank security tapes from when Booth obtained bank cheques.
In a voluntary police/ASC interview that day Hannes asserted the options had been bought without his authority, by a person he did not wish to name but with whom he had formed an investment syndicate. This person would be known as Mr X.
The trial in the District Court of New South Wales
was long and complex. The prosecution called 42 witnesses and 3 expert witnesses and offered 200 exhibits. Justice Backhouse's summing up took four days. The identification of Hannes as Booth relied on witnesses from the banks, Mail Boxes Etc, and handwriting analysis from documents by Booth and indentations on paper found at Hannes home. Among those indentations was a page of apparent practice signatures "M. Booth", and notes about the mailbox and voicemail.
Hannes' defence was what he said in the police/ASC investigation, namely that he had been in an investment syndicate with an English friend who was wealthy and knowledgeable about finance and invited him to invest. The friend had then made the options purchases without Hannes' authority, but also without any special knowledge about TNT. And further that when the alleged insider trading became public knowledge Hannes and the friend agreed to return the monies. Hannes also indicated that he was due to meet his English friend in London to clarify the situation, however he could not find him.
After eight days deliberation the jury returned guilty on the FTR charges, and after further instructions from the judge and another two days they reached guilty on the insider trading charge.
Justice Backhouse handed down a sentence of 2 years 2 months imprisonment and $100,000 fine for the insider trading, and 4 months each for the FTR offences, but with those terms to all be served concurrently, and fines of $5,000 for each FTR offence in lieu of the terms being cumulative. She set a recognisance release period of 18 months.
An appeal
by Hannes in the NSW Court of Criminal Appeal
was upheld on the grounds of certain directions given by Justice Backhouse to the jury. The conviction was quashed and a retrial ordered. Hannes had by that time served 15½ months of his sentence and was released pending the outcome of the retrial.
The retrial in the Supreme Court of New South Wales
at Darlinghurst reached the same conclusion as the first, guilty on all charges. Justice James handed down the same sentence of 2 years 2 months and $100,000 fine for insider trading, and 4 months each for the FTR offences. But he made those FTR terms cumulative on the insider trading (but concurrent with each other) for a total 2 years 6 months. He set a recognisance release period of 20 months, which accounting for time already served meant a further 4½ months in prison for Hannes.
Justice James decided for cumulative sentences on the basis that the FTR offences were a separate criminality from the insider trading, and if they were not cumulative then the sentence would be manifestly inadequate.
On 2008-05-13 Hannes won an uncommon second hearing in the High Court
, in order to make an argument for special leave to appeal. A similar application was rejected in March 2008.
Insider trading
Insider trading is the trading of a corporation's stock or other securities by individuals with potential access to non-public information about the company...
over call option
Call option
A call option, often simply labeled a "call", is a financial contract between two parties, the buyer and the seller of this type of option. The buyer of the call option has the right, but not the obligation to buy an agreed quantity of a particular commodity or financial instrument from the seller...
s bought prior to the takeover
Takeover
In business, a takeover is the purchase of one company by another . In the UK, the term refers to the acquisition of a public company whose shares are listed on a stock exchange, in contrast to the acquisition of a private company.- Friendly takeovers :Before a bidder makes an offer for another...
of TNT
TNT Logistics
CEVA Logistics is a global logistics company.It provides solutions in freight management, contract logistics, distribution and transportation management. The company runs a global network with facilities in over 170 countries and employs more than 49,000 people worldwide.- History :CEVA was...
(to whom Macquarie was an advisor) by the Dutch postal service (KPN) in 1996.
The options were bought in the name of Mark Booth and cost about $90,000. After the takeover bid they were worth over $2 million. Hannes vehemently denied he was this Booth, or that he had inside information anyway. The prosecution had good indirect evidence of both, which the jury
Jury
A jury is a sworn body of people convened to render an impartial verdict officially submitted to them by a court, or to set a penalty or judgment. Modern juries tend to be found in courts to ascertain the guilt, or lack thereof, in a crime. In Anglophone jurisdictions, the verdict may be guilty,...
accepted at an initial trial
Jury trial
A jury trial is a legal proceeding in which a jury either makes a decision or makes findings of fact which are then applied by a judge...
and again at a retrial ordered on appeal
Appeal
An appeal is a petition for review of a case that has been decided by a court of law. The petition is made to a higher court for the purpose of overturning the lower court's decision....
.
Hannes was also convicted of offences under the Financial Transaction Reports Act 1988 (FTR) relating to the way he had split cash transactions at multiple bank branches to stay under the AUSTRAC reporting threshold of $10,000.
Hannes sentence at the trial in 1999 was 2 years and 2 months imprisonment
Imprisonment
Imprisonment is a legal term.The book Termes de la Ley contains the following definition:This passage was approved by Atkin and Duke LJJ in Meering v Grahame White Aviation Co....
and $110,000 fines. He served 15½ months of an 18 month non-parole period before granted the retrial. At the retrial in 2002 the sentence was 2 years 6 months and $100,000 fines, with a non-parole period of 20 months, making a further 4½ months to serve.
Inside information
TNTTNT Logistics
CEVA Logistics is a global logistics company.It provides solutions in freight management, contract logistics, distribution and transportation management. The company runs a global network with facilities in over 170 countries and employs more than 49,000 people worldwide.- History :CEVA was...
(now part of TNT N.V.
TNT N.V.
TNT N.V., more commonly known as TNT, is an international express and mail delivery services company with headquarters in Hoofddorp, Netherlands. In the Netherlands, TNT operates the national postal service under the name TNT Post. The group also offers postal services in eight other European...
) was an Australian transport and logistics company with significant operations in Europe. It was a client of investment bank Macquarie Bank and in May 1996 TNT and their Macquarie advisors, from the Corporate Advisory Division of Macquarie Corporate Finance (MCF), had a meeting in Hong Kong
Hong Kong
Hong Kong is one of two Special Administrative Regions of the People's Republic of China , the other being Macau. A city-state situated on China's south coast and enclosed by the Pearl River Delta and South China Sea, it is renowned for its expansive skyline and deep natural harbour...
with Royal PTT Nederland NV (KPN), the Dutch postal service, concerning a possible friendly takeover
Takeover
In business, a takeover is the purchase of one company by another . In the UK, the term refers to the acquisition of a public company whose shares are listed on a stock exchange, in contrast to the acquisition of a private company.- Friendly takeovers :Before a bidder makes an offer for another...
of TNT by KPN. Back in Sydney
Sydney
Sydney is the most populous city in Australia and the state capital of New South Wales. Sydney is located on Australia's south-east coast of the Tasman Sea. As of June 2010, the greater metropolitan area had an approximate population of 4.6 million people...
, the Macquarie advisors put together what they called "project Tennis", and those in this "Tennis team" were to keep the project confidential.
Hannes was an executive director of MCF, but not in the team, and so did not know directly of the proposed transaction. But he became aware something was happening, since in July 1996,
- One of his junior staff, Murdoch, was working on a valuation of TNT, which Murdoch told Hannes would be between $2.20 and $3.20 (which Hannes thought rather high).
- At a board meeting which Hannes attended, the subject of project Tennis came up, though the board was told only it concerned a major restructure of TNT.
- At a company conference in Mt Buller a slide referred to project Tennis and a possible fee of $5 to $10 million for Macquarie.
From 1 August 1996 Hannes took permanent leave from the bank, but kept keys to the MCF offices, since he would still be doing work for at least one client. Before and after taking leave, Hannes made a number of late night visits, the prosecution would allege that on those occasions he looked at the work of project Tennis.
On 2 September 1996 TNT announced it has made an agreement, with certain conditions, to sell its stake in Air New Zealand
Air New Zealand
Air New Zealand Limited is the national airline and flag carrier of New Zealand. Based in Auckland, New Zealand, the airline operates scheduled passenger flights to 26 domestic destinations and 24 international destinations in 15 countries across Asia, Europe, North America and Oceania, and is...
to Ansett Airlines. One of the things the prosecution would allege Hannes learnt from project Tennis was that KPN wasn't interested in TNT's shares in Air New Zealand, and that the prospect of a takeover would be greatly increased if TNT could sell them. It seemed that with this impediment removed Hannes took action, two days later.
Insider trading
On 4 September 1996, Hannes transferred $200,000 from his Leveraged Equities account at stockbroker Ord Minnett to a bank account in his name at the Commonwealth Bank (CBA).On 5 September 1996, one "Mark Booth" rented a mailbox at Mail Boxes Etc in Mosman
Mosman, New South Wales
Mosman is a suburb on the Lower North Shore of Sydney, in the state of New South Wales, Australia. Mosman is located 8 kilometres north-east of the Sydney central business district and is the administrative centre for the local government area of the Municipality of Mosman.-Localities:In February...
, subsequently used for correspondence and grandly called "Suite 140, 656 Military Road".
In the later trial, the court accepted the prosecution's allegation that this Booth was Hannes and everything done as Booth was done by Hannes. For the description below the distinction will be preserved, to show where the identification could (or could not) be made. The name "M. Booth" was apparently from Hannes' sister Mignon Booth (her married name). Hannes said in a police interview about one of the bank cheque applications "M. Booth" that it was to have been "in the name of my sister." But there was no suggestion his sister was involved in any way.
On 6 September 1996, Hannes withdrew cash of $10,000, $10,000 and $20,000 from his CBA account, each withdrawal at a different branch. All were over the AUSTRAC cash transactions reporting threshold. The first two were reported electronically, without Hannes' knowledge. At the third branch it was done manually on a form the teller asked Hannes to sign. It seemed only at that point did he learn of that rule.
That same day "Booth" obtained a bank cheque for $9,000, paid with cash, for stock brokers Ord Minnett and deposited with them. It seemed money that had started at Ord Minnett was going back there, under a different name.
On 9 September 1996, Hannes made further cash withdrawals from his CBA account, this time $9,900, $6000, and four of $9,000, again each from a different branch. This brought the total withdrawn to $91,900.
That same day Booth obtained nine bank cheques, paid with cash, for Ord Minnett and deposited there. Those cheques were obtained all at different bank branches, of the CBA, NAB
National Australia Bank
National Australia Bank is one of the four largest financial institutions in Australia in terms of market capitalisation and customers. NAB is ranked 17th largest bank in the world measured by market capitalisation...
, ANZ and Westpac
Westpac
Westpac , is a multinational financial services, one of the Australian "big four" banks and the second-largest bank in New Zealand....
. Some of those branches were just metres away from each other. There were eight cheques of $9,000 and one of $9,900. This brought the total deposited to $90,900.
On 17 September 1996, Booth phoned Ord Minnet and spoke to broker Andrew Staehli. Booth identified himself as a marketing consultant from the UK
United Kingdom
The United Kingdom of Great Britain and Northern IrelandIn the United Kingdom and Dependencies, other languages have been officially recognised as legitimate autochthonous languages under the European Charter for Regional or Minority Languages...
staying at the InterContinental Hotel. (The hotel later gave evidence they'd had no guest of that name.)
Booth got a quote for TNT call option
Call option
A call option, often simply labeled a "call", is a financial contract between two parties, the buyer and the seller of this type of option. The buyer of the call option has the right, but not the obligation to buy an agreed quantity of a particular commodity or financial instrument from the seller...
s expiring November with a strike price
Strike price
In options, the strike price is a key variable in a derivatives contract between two parties. Where the contract requires delivery of the underlying instrument, the trade will be at the strike price, regardless of the spot price of the underlying instrument at that time.Formally, the strike...
of $2.00. The quote was between 1c and 2c per share, since TNT was then trading for just under $1.60 and there was only 2 months to expiry. Staehli advised this would be a risky trade and required written instructions, plus the usual options client agreement and CHESS
Australian Clearing House and Electronic Sub-register System
The Australian Clearing House Electronic Subregister System is an electronic book-entry register of holdings of approved securities that facilitates the transfer and settlement of market transactions between the Australian Securities Exchange and the ASX Settlement and Transfer Corporation Pty...
sponsorship agreement. Booth arranged to pick up those documents in person from the Ord Minnett office.
On the morning of 18 September 1996 the completed documents were on Staehli's desk. Booth had come to the office, but Staehli never met him in person (and therefore could not subsequently identify him). The options agreement was witnessed by one "Alexi Voltraint" of 52 Railway Rd, Petersham
Petersham, New South Wales
Petersham is a suburb in the Inner West of Sydney, in the state of New South Wales, Australia. Petersham is located 6 kilometres south-west of the Sydney central business district, in the local government area of Marrickville Council...
. It later turned out there was no such person, but at number 51 was Patricia Myers whom Hannes had met at a book club meeting that month.
Booth's written instruction was to buy November $2.00 TNT call options for up to 2c each, as many as could be had (including brokerage
Stock broker
A stock broker or stockbroker is a regulated professional broker who buys and sells shares and other securities through market makers or Agency Only Firms on behalf of investors...
) for the money on account. Staehli did this that day the 18th and then the 19th at prices of 1.5c or 2c per share, totalling about 5,000 options contracts (on 1,000 shares each).
On 19 September 1996 Booth opened a voicemail
Voicemail
Voicemail is a computer based system that allows users and subscribers to exchange personal voice messages; to select and deliver voice information; and to process transactions relating to individuals, organizations, products and services, using an ordinary telephone...
service at Voicemail National in Surry Hills
Surry Hills, New South Wales
Surry Hills is an inner-city suburb of Sydney, in the state of New South Wales, Australia. Surry Hills is located immediately south-east of the Sydney central business district in the local government area of the City of Sydney...
. He phoned Staehli to give him that number, and Staehli advised the options had been bought and $1,500 remained in the account. It apparently annoyed Booth that not all the money had been applied.
On 2 October 1996 KPN announced its takeover bid, for $2.45 per share. This was generally regarded as rather high at the time, some commentators even suggested the Dutch had miscalculated the exchange rate
Exchange rate
In finance, an exchange rate between two currencies is the rate at which one currency will be exchanged for another. It is also regarded as the value of one country’s currency in terms of another currency...
or something, but the TNT business in Europe
Europe
Europe is, by convention, one of the world's seven continents. Comprising the westernmost peninsula of Eurasia, Europe is generally 'divided' from Asia to its east by the watershed divides of the Ural and Caucasus Mountains, the Ural River, the Caspian and Black Seas, and the waterways connecting...
was highly desirable for them and the bid had the backing of the TNT board.
Staehli talked to Booth that afternoon, telling him he'd become a millionaire
Millionaire
A millionaire is an individual whose net worth or wealth is equal to or exceeds one million units of currency. It can also be a person who owns one million units of currency in a bank account or savings account...
. The options were now worth roughly the difference between the strike $2.00 and the bid $2.45, an amount over $2 million. On 3 October 1996 Staehli received a letter from Booth instructing him to hold the position until 4 November 1996 in case a rival bidder made a higher offer, then sell.
Investigation
Not surprisingly, this big win immediately raised suspicions at the exchange and the following day (the 3rd) the Australian Securities Commission (ASC) began an investigation. On 4 October 1996 the ASC got a court order freezing the account. The options were still sold per Booth's instructions, for a total $2,039,710, but that amount was held in the account.In November 1996 Booth fax
Fax
Fax , sometimes called telecopying, is the telephonic transmission of scanned printed material , normally to a telephone number connected to a printer or other output device...
ed instructions to Staehli directing the firm to pay monies under the direction of the ASC so the investors he had bought from wouldn't suffer losses. Maybe Hannes realized he was in trouble and hoped to extricate himself. In any case such payments were in fact made, with the writers of the options compensated.
The ASC investigated many people from Macquarie, TNT and KPN who might have been Booth, using good old-fashioned perseverance. They also used NetMap software developed by NetMap Analytics. NetMap was designed to look at large data sets for unusual links between people or groups in their communications or financial dealings, to identify possible wrongdoing. After a three week run it proposed several people, of whom Hannes was one.
On 17 January 1997 a search warrant was executed at Hannes home and documents, his computer, an anorak
Anorak
An anorak or parka is a type of heavy jacket with a hood, often lined with fur or fake fur, so as to protect the face from a combination of freezing temperatures and wind...
, a black bag and glasses were seized. The anorak and bag were similar to ones in bank security tapes from when Booth obtained bank cheques.
In a voluntary police/ASC interview that day Hannes asserted the options had been bought without his authority, by a person he did not wish to name but with whom he had formed an investment syndicate. This person would be known as Mr X.
Prosecution
The ASC charged Hannes,- Under the corporations act, for insider trading in the options purchase (as Booth).
- Under the FTR act, for splitting the cash withdrawals (in his own name).
- Under the FTR act, for splitting the cash used for bank cheques (as Booth).
The trial in the District Court of New South Wales
District Court of New South Wales
The District Court of New South Wales has jurisdiction to hear most indictable offences . It hears appeals from the Local Court and civil claims up to A$750 000. In some circumstances the amount may be higher, e.g. with the consent of the parties or in motor accident claims etc...
was long and complex. The prosecution called 42 witnesses and 3 expert witnesses and offered 200 exhibits. Justice Backhouse's summing up took four days. The identification of Hannes as Booth relied on witnesses from the banks, Mail Boxes Etc, and handwriting analysis from documents by Booth and indentations on paper found at Hannes home. Among those indentations was a page of apparent practice signatures "M. Booth", and notes about the mailbox and voicemail.
Hannes' defence was what he said in the police/ASC investigation, namely that he had been in an investment syndicate with an English friend who was wealthy and knowledgeable about finance and invited him to invest. The friend had then made the options purchases without Hannes' authority, but also without any special knowledge about TNT. And further that when the alleged insider trading became public knowledge Hannes and the friend agreed to return the monies. Hannes also indicated that he was due to meet his English friend in London to clarify the situation, however he could not find him.
After eight days deliberation the jury returned guilty on the FTR charges, and after further instructions from the judge and another two days they reached guilty on the insider trading charge.
Justice Backhouse handed down a sentence of 2 years 2 months imprisonment and $100,000 fine for the insider trading, and 4 months each for the FTR offences, but with those terms to all be served concurrently, and fines of $5,000 for each FTR offence in lieu of the terms being cumulative. She set a recognisance release period of 18 months.
An appeal
Appeal
An appeal is a petition for review of a case that has been decided by a court of law. The petition is made to a higher court for the purpose of overturning the lower court's decision....
by Hannes in the NSW Court of Criminal Appeal
Supreme Court of New South Wales
The Supreme Court of New South Wales is the highest state court of the Australian State of New South Wales...
was upheld on the grounds of certain directions given by Justice Backhouse to the jury. The conviction was quashed and a retrial ordered. Hannes had by that time served 15½ months of his sentence and was released pending the outcome of the retrial.
The retrial in the Supreme Court of New South Wales
Supreme Court of New South Wales
The Supreme Court of New South Wales is the highest state court of the Australian State of New South Wales...
at Darlinghurst reached the same conclusion as the first, guilty on all charges. Justice James handed down the same sentence of 2 years 2 months and $100,000 fine for insider trading, and 4 months each for the FTR offences. But he made those FTR terms cumulative on the insider trading (but concurrent with each other) for a total 2 years 6 months. He set a recognisance release period of 20 months, which accounting for time already served meant a further 4½ months in prison for Hannes.
Justice James decided for cumulative sentences on the basis that the FTR offences were a separate criminality from the insider trading, and if they were not cumulative then the sentence would be manifestly inadequate.
On 2008-05-13 Hannes won an uncommon second hearing in the High Court
High Court of Australia
The High Court of Australia is the supreme court in the Australian court hierarchy and the final court of appeal in Australia. It has both original and appellate jurisdiction, has the power of judicial review over laws passed by the Parliament of Australia and the parliaments of the States, and...
, in order to make an argument for special leave to appeal. A similar application was rejected in March 2008.