A general manager at ASX-listed pharmacy wholesaler Sigma Healthcare is facing insider trading charges after the corporate regulator alleged he sold shares while knowing details of the company’s contract negotiations with Chemist Warehouse Group.
In a statement on Friday afternoon, the Australian Securities and Investments Commission (ASIC) confirmed Michael John Story, a general manager at Sigma, had been charged with two counts of insider trading relating to share sales in May and June of 2018.
Sigma is a pharmacy operator and wholesaler and in 2018 it was a major supplier to Chemist Warehouse Group.
On July 2, 2018, Sigma told investors its contract with Chemist Warehouse would end on June 30, 2019 after the two parties could not agree on the terms of an extension. After the announcement was released, the company’s shares closed 40 per cent lower than on the previous trading day.
Sigma has since entered a different supply agreement for “fast-moving consumer goods” with Chemist Warehouse, which it announced in November 2019.
ASIC alleges that Mr Story disposed of 645,047 Sigma shares on May 9, 2018 and 250,000 shares on June 21, 2018.
“ASIC alleges that, at the time he disposed of the two tranches of Sigma shares, Mr Story was in possession of inside information relating to the status of negotiations to renew the wholesale supply agreement between Sigma and CWG [Chemist Warehouse Group],” the watchdog said.
In a statement, Sigma Healthcare said it was aware of the allegations against Mr Story.
“Whilst Sigma is not party to the proceeding, we are taking this matter seriously and will continue to monitor the court process,” a company spokesman said.
“Sigma has been assisting ASIC with its inquiries and no other Sigma employees are under investigation in relation to this matter.
“Michael [Story] remains an employee of Sigma at this point in time. Sigma will make no further comment pending the outcome of court proceedings.”
At the time of the alleged offences each of the charges carried a maximum penalty of 10 years’ jail. In March 2019, the maximum penalty was increased to 15 years’ imprisonment.
The matter has been adjourned to a committal hearing in the Melbourne Magistrates’ Court on December 18.
Source: Thanks smh.com