A Melbourne man appeared at the Melbourne Magistrates' Court on Thursday to face charges of multiple offences of insider trading in ASX lithium shares.
The Australian Securities and Investments Commission is accusing Duncan Stewart, from Armadale in inner Melbourne, of insider trading of Kidman Resources shares on two occasions in April 2019.
The man is also alleged to have encouraged a family member to also buy Kidman Resources in March and April 2019.
A secret takeover proposal
Of course, there is nothing wrong with buying shares or encouraging someone else to buy shares.
The problem is, ASIC alleges, Stewart knew that conglomerate Wesfarmers Ltd (ASX: WES) had proposed to acquire Kidman Resources.
This information was not known to the public at the time of Stewart's actions.
The takeover pitch was finally revealed to the ASX on 2 May 2019. This caused the Kidman Resources share price to rocket from $1.29 to $1.84, which was a phenomenal 43% jump in a single day.
ASIC accuses Kidman of raking in $68,114 of profit from the insider trading.
Convictions could lead to jail terms of 10 or 15 years, according to the laws at the time of Stewart's alleged offences.
Eventually Wesfarmers did acquire the lithium miner in September 2019 for $776 million. Kidman Resources was then delisted from the ASX in the same month.
The case is due to resume at the Melbourne Magistrates' Court on 4 December.
