My stab at how things might play out for the various...

My stab at how things might play out for the various stakeholders ...

Gilman Wong
GW has seen his last day at SRX.  The lawyers, working for the SRX Board, will "discover" exactly what the Board is paying them for.  That Gilman was derelict in his duty as an SRX Director, by selling shares when in possession of price-sensitive information that had not been disclosed to the market.  His only two excuses: "I told the Board what I was going to do in July" and "I've sold for tax purposes previously" have absolutely no relevance to this dereliction of duty.

Even if he were able to convince anyone that what he did was legal, he's had strikes with:
1.  Korea
2.  US / Mangano
3.  Sales Growth.

GW has both potential corruption and incompetence issues to deal with.  There is no way back, and the Board should use the legal "findings" to justify a no-compensation termination.

The Board
The Board will use the legal findings and the old "profoundly misled" gem to justify their inaction.  They will claim that while the knew GW was planning to sell shares, they had no idea that he would proceed with the sale while in possession of price sensitive information.  They will also claim that they knew nothing about the drop off in sales until GW presented them with the scenario in early-December.  In short, they will throw GW under the bus and then reverse for good measure.  This is the only way they can avoid being complicit in any findings of corruption.

This strategy, if successful, changes their culpability from corruption to incompetence.  Which way this falls is irrelevant as either way they must be replaced.  But to ensure they are replaced by anyone other than cronies, we need to band together and act.  First step is an EGM (get your share pledges over to Cafa .... who should also me our nominee if he's agreeable).  I suspect a couple of the fund managers will also put forward nominees.


The Shareholders
There will be a class action against the Board and Company, however, these never reach court.  The class action will be funded by a litigation funder (making it "free" and "risk-less" for shareholders) and will be settled for the value of the Director's Liability Insurance.  This will be a poor outcome for those shareholders who were burnt by the episode, but:
1.  Will be better than nothing
2.  Will have limited impact on the company (a good thing if you plan on staying a shareholder)
3.  Will be encouraged by the litigation firm who will threaten that if a shareholder does not accept a settlement, then they may be exposed to fees and / or damages.

If Wong and the Board are replaced prior to the release of upcoming trial results, my view is that SRX shareholders will end up in a better place than if this whole episode had never happened.  If GW did not do the share trade, we would have been faced with the sales-growth decline anyway, but in itself, this would probably not have been enough to force a change to the CEO and Board.

We are now presented with an opportunity to reinvigorate Board and Management and institute proper corporate governance, prior to the opportunity for significant sales growth.  I'm encouraged that the process has commenced relatively quickly, so I'm back to a "buy" at these levels.