The former CEO of Sydney-based video tech company Big Un, once valued at $840 million, has been sentenced to one year and nine months in prison for insider trading, to be served in the community.
Richard Evans pleaded guilty earlier this year to sharing sensitive information about Big Un’s funding arrangements and customer numbers with a shareholder who he should reasonably have known was likely to trade in the company’s shares.
The District Court of NSW last week sentenced Evans to one year and nine months’ imprisonment, to be served under an intensive correction order (ICO), along with 400 hours of community service.
An ICO in NSW is a prison sentence of up to two years that an offender serves in the community instead of full-time jail.
Evans has also been automatically disqualified from managing companies for five years.
He had faced a maximum penalty of 10 years’ imprisonment and a fine of up to 4,500 penalty units, worth more than $1.6 million.
Down it goes
Big Un provided social media video content packages to small and medium-sized businesses and was publicly listed on the ASX.
The company was one of the ASX’s top-performing shares in 2017, following reports of significant revenue growth and strong cash flow.
It reported a 500 per cent increase in revenue to $14 million for the 2017 financial year.
But after accounting standards changed to require companies to report only revenue from customers who had actually agreed to pay for their services, Big Un reported a $52 million loss and negative cash flow.
The change exposed the company’s practice of reporting money forwarded by a “sponsor” before customers had agreed to pay for its video services.
Big Un was suspended from trading on the ASX in February 2018 after details of the funding arrangement emerged.
It was subsequently placed into voluntary administration, delisted from the ASX and is now in liquidation.
Evans first appeared in court in early 2023 over the insider trading allegations.
He was charged with providing information about the number of Big Un customers who had purchased its $12,000 video package, as well as the company’s $20 million funding arrangement with Finstro.
The arrangement allowed customers to purchase Big Un’s products on deferred payment terms.
Evans was prosecuted by the Office of the Director of Public Prosecutions following a referral from ASIC.
More people sentenced
Several other people associated with Big Un have also faced criminal or regulatory action over the company’s collapse.
The company’s former chief financial officer was charged with insider trading in 2023, but the case was discontinued after a jury failed to reach a unanimous verdict following a five-week trial.
Big Un’s auditor was convicted of failing to conduct the company’s 2017 audit in accordance with auditing standards, while another auditor had their registration suspended for one year over their involvement.
A former investment analyst was sentenced to three years’ imprisonment, also to be served under an intensive correction order, after being convicted of five counts of insider trading and one count of communicating inside information about Big Un between 2016 and 2018.
Insider trading remains an enforcement priority for ASIC, which has established a dedicated insider trading team to accelerate investigations and increase the number of criminal briefs referred to the Office of the Director of Public Prosecutions.
In late 2022, a former Tesla Australia director pleaded guilty to insider trading after using information about an in-principle agreement between Tesla and an Australian mining company to buy its shares.
He made a profit of nearly $29,000 from the trades.
