Last week, Sydney socialite Oliver Curtis, who has attracted headlines through his marriage to public relations adviser Roxy Jacenko, was convicted of insider trading.
Curtis's crime was making trades in contracts for difference based on information procured for him by his equities trader friend, John Hartman. Hartman pleaded guilty to insider trading in 2010 and served 15 months in prison.
However, it is becoming well understood that Australia locks up too many people. The national incarceration rate has grown by 40 per cent in the last decade. And prison sentences are incredibly expensive. Prison in Australia costs on average $100,000 per prisoner per annum. It's one thing to be outraged by Curtis and insider trading. It's another thing for taxpayers to be asked to pay for his punishment for the next five years.
The key consideration in sentencing is proportionality: the punishment must fit the crime. White-collar criminals, whose crimes often involve a breach of trust, are usually held to account for the damage they cause to both their victims and to public confidence in the financial system.
But there is evidence that markets do not respond one way or another to high-profile cases like this one. Perhaps the public already considers the financial system to be rigged. Or perhaps the public's faith in the integrity of white-collar workers is unshakeable, though that is probably less likely. Either way, the public don't take much notice of cases like this when they are making investment decisions. The market's reputation does not depend on Curtis going to jail.
White-collar offenders normally pose no physical threat to the community and generally have a history of prior good character. Putting them in prison does nothing to keep us safe. So when courts give prison sentences to white collar criminals, those sentences are usually justified on the basis that public outrage demands such a punishment and that prison might have some general deterrence effect.
Both of these needs can be serviced without society having to incur the steep cost of imprisonment.
As it stands, the maximum fine that Curtis may pay would barely cover the cost of sending him to prison. Why would we want to pay to keep Curtis locked up when we could be making him pay us?
Curtis should have to pay a fine sufficiently large that it hurts him and communicates the public's outrage. And if this were a tort, which arguably it should be, Curtis would have to make restitution. He should have to do so here as well.
The fine should also communicate to the financial industry that it needs to be more vigilant in policing itself. Just as batsmen get hit in the head more often now that they wear helmets, our financial industry seems to think that regulation alone will protect it.
Combined with losing the ability to work in his chosen profession and the public shaming to which he has been subjected, a fine and restitution would likely be as effective a deterrent as prison. If something stronger is needed, home detention should be an option.
It might be argued that this is unfair because it allows wealthy offenders to buy their way out of prison. But there is a genuine principle at stake.
Whatever their social status, nonviolent, low-risk offenders, should be given the chance to avoid prison. Our skyrocketing incarceration rate is not lowering the amount of crime or reoffending and it is costing a fortune. National expenditure on prisons is $3.6 billion per year.
The cynical push by the Greens to appear tough on white-collar crime will only make this problem worse.
Lastly, we should wonder about the role of the Australian Securities and Investment Commission in the Curtis case. Curtis' offending took place between 2007 and 2008. After Curtis's accomplice turned him in in 2009, it took more than six years to secure his conviction.
A recent review of ASIC's capability revealed that it spends more on enforcement actions than comparable overseas regulators. ASIC also struggles to perform all of its expected functions. Its resources are tied-up in pursuing lengthy, high-profile criminal cases, which do not contribute to achieving its strategic purpose.
The fact that ASIC is a poorly functioning regulator does not mean, as the Turnbull government thinks, that ASIC needs more money. Instead, rather than headline-chasing, ASIC should focus more on prevention and education. It would be aided in these tasks if government would cut red tape and give ASIC fewer regulations to police.
Oliver Curtis broke the law and should be punished. White-collar offenders like Curtis should have to pay large fines, make restitution, and forfeit their right to work in positions of trust. Justice, however, does not require that we jail non-violent, low risk offenders. We ought to think again.
ADVERTISEMENT
No comments:
Post a Comment