"You're a bad boy!" an Auckland man at the centre of New Zealand's first insider trading trial texted his former workmate after a confidential tip-off, a court has heard.
Hamish Marc Sansom faces a charge of insider conduct under the Financial Markets Conduct Act and is on trial before a jury and Justice Anne Hinton in the High Court at Auckland.
It is the first criminal trial in New Zealand's history for insider trading.
The Financial Markets Authority (FMA) alleges Sansom, who had been working for Eroad, a transport logistics and technology firm, sold 15,000 shares in the company after a former colleague gave him confidential US sales information in 2015.
Eroad is a publicly listed New Zealand company and also operates in Australia and the United States.
Sansom had been on Eroad's executive management team after a lengthy career at Vodafone - where he again works - and was responsible for a team that included insights and analytics manager Jeffrey Peter Honey.
Sansom hired Honey after the pair came to know each other while working at Vodafone, the court heard.
FMA prosecutor Nick Williams told the court today that Sansom acted on the "secret information" from his old workmate when selling his shares to avoid a personal financial loss.
However, Sansom's counsel David Jones QC said he client was simply smarter than everyone else and analysed market trends.
The information from Honey came in the form of a text message and executive sales summary after Honey learned of Eroad's poor US sales, as the company pushed into the North American market.
The September 22, 2015 message read: "US sales not doing [too well], time to sell up? Confidential obviously."
"You're a bad boy, but thanks!" Sansom replied.
But, a minute later Sansom also texted Honey: "Was going to sell down significantly anyway."
On September 24, 2015, Sansom sold 15,000 Eroad shares at $3.41 each.
Four days passed before news of Eroad's US sales setback went public and its share price tumbled.
"The market reacted badly," Williams said.
The announcement resulted in the biggest daily and weekly fall in Eroad's trading history, since its initial public offering in August 2014.
By October 2, 2015, its shares were trading at $2.60 each.
Williams said Sansom had moved the Eroad shares out of his family trust and into his own name before selling them online.
"He had insider information and was prohibited from selling," Williams told the jury, "material information that wasn't generally known and that is a criminal offence."
Honey has also been prosecuted.
Jones told the court today that the Crown was trying to paint his client as a bad man.
"The defence says that is rubbish," he said.
"This man looked at the reality of publicly available material."
Jones said Sansom knew well before Honey's "unexpected" text message that Eroad's US sales were well below expectations.
"This is a case of numbers vs words. Reality vs rhetoric," the Queen's Counsel said.
"This man looked at the numbers and he worked it out for himself. He had planned to sell the Eroad shares for months.
"It's not rocket science, it's just being smart and being perceptive.
"You can't be penalised for being smarter than someone else for analysing material and this man is an analyst."
Sansom didn't know knowledge of the poor US sales wasn't public information at the time he dumped his shares, Jones added.
"For anyone to be guilty of a crime you have to have a guilty mind," the lawyer said.
The trial is expected to last eight days.