Thursday 7 June 2007 LAWFUEL – The Law Newswire – Australian Securities and Investments Commission (ASIC) Chairman, Mr Tony D’Aloisio, said that the custodial sentence handed down today to Mr Dominic Fodera shows that company officers who withhold information from investors will face serious consequences. On 4 April 2007, Mr Fodera was convicted of authorising the issue of a prospectus from which there was a material omission.
Justice Megan Latham sentenced Mr Fodera, the former Finance Director and Chief Financial Officer of HIH Insurance Limited (HIH) to three years imprisonment to commence from 10 May 2007, following his conviction on criminal charges laid by ASIC. Mr Fodera is to be released after two years upon entering into a recognisance. ASIC has successfully prosecuted nine individuals arising out of its ongoing investigations into the HIH group of companies, with custodial sentences having been handed down for eight of these.
The Commonwealth Director of Public Prosecutions prosecuted the matter. Background On 4 April 2007 after a four and a half week trial, Mr Fodera was found guilty of authorising, on 26 October 1998, the issue of a prospectus by HIH Holdings (NZ) Ltd to raise up to $155 million of converting notes, that contained a material omission. The prospectus omitted to disclose the effect of a transaction entered into at the same time between HIH and Societe Générale Australia Limited (SGAL). This transaction involved SGAL taking up a priority allocation of the notes in the approximate sum of $35 million in exchange for HIH depositing approximately the same sum with SGAL and entering into a swap arrangement.
The effect of the transaction was that HIH in fact bore the financial risk on the $35 million of converting notes rather than SGAL, as the prospectus suggested. The purpose of the issue of converting notes under the prospectus was to assist HIH in funding the takeover of the FAI Insurance Group. For further information contact: Michael van Maanen ASIC Media Unit Telephone: 02 9911 2658 Mobile: 04120 500 351