Eroad insider trader sentenced to six months' home detention

A man was sentenced to six months home detention today for sharing confidential market information with a former employee of transport and logistics company Eroad. Photo / File

A man who shared confidential market information with a former colleague has been sentenced to six months' home detention.

The man, who can now be named as Jeffrey Peter Honey, worked as an insights and analytics manager for transport logistics company Eroad.

In the first case of its type in New Zealand, Judge Heemi Taumaunu today passed the sentence after a lengthy hearing in Auckland District Court before a gallery packed with Honey's family and supporters.

The court heard that Honey was privy to confidential market information and learned that Eroad's attempted expansion into the United States was not going as planned.

Despite staff being explicitly told not to disclose any such information, he sent a photograph of market data and an accompanying text to a former colleague which said:
"US sales not doing too well. Time to sell up. Confidential obviously."

The former colleague, who is facing separate charges and cannot be named, responded:
"You're a bad boy, but thanks."

The man subsequently sold 15,000 shares in the company, valued at some $51,000.

Judge Taumaunu acknowledged that Honey was a community-minded, honest person who was loved and respected by his family, friends and colleagues.

"The many character references I received attest to his excellent character," he said.

However, he declined Honey's application to be discharged without conviction as it was imperative his sentence acted as a deterrent and retained the integrity of New Zealand's financial markets.

"The principal of deterrence is the primary sentencing purpose. The viability of New Zealand's markets depends on trust," Judge Taumaunu said.

Honey did not personally benefit from his offending and the judge said he apparently acted out of "some sort of misguided sense of loyalty" to his former colleague.

The court was told that the Financial Markets Authority (FMA), which brought the charges, had been investigating the matter for some 12 months.

Prosecutor Nick Williams had sought a starting point of 18-20 months' imprisonment for Honey, whose case is the first where insider trading has been prosecuted as a criminal offence in New Zealand.

"The FMA submits that any form of insider conduct seriously undermines New Zealand markets and harms New Zealand investors and shareholders," Williams said.

He did not challenge Honey's prior good character, which was why he managed to land the job in the first place.

"We submit that even in circumstances where this did not involve particular sophistication and subterfuge, it is still a severe breach of trust."

Honey's lawyer, Paul Wicks, submitted that the offence was on the lowest-possible level, was a one-off and completely out of character.

A conviction would spell an end to his 20-year career, he said.