FMA files against Milford's Warminger for market manipulation

Friday 31st July 2015

The Financial Markets Authority has filed civil proceedings against Milford Asset Management portfolio manager Mark Warminger alleging he manipulated stock prices in breach of the Securities Markets Act.

The High Court suit seeks financial penalties against Warminger for trades he carried out between December 2013 and August 2014. The FMA alleges he manipulated markets by "placing small trades directly on market in one direction, followed by large off-market trades in the opposite direction; trading that manipulates the closing price; and trading conducted in order to set the price, rather than for a genuine commercial purpose."

In his first public statement on the matter, Warminger said through his lawyer that he "denies that he manipulated any market and will defend the case."

"When the facts are traversed in court, the public will be able to draw its own conclusions on both the FMA and this particular claim," said Marc Corlett, from the law firm Shortland Chambers.

"With regard to the categories of trading activity specified in the FMA’s news release today, it should be noted that it is a matter for interpretation, firstly whether the activity was as suggested; and secondly whether, even if that were so, (which is denied) it would constitute market manipulation."

In June, Milford agreed to a $1.5 million settlement with the FMA over the trading activities. In paying the money, the fund manager rejected any liability. The New Zealand Superannuation Fund suspended its investment mandate with Milford during the FMA investigation.

“The issues raised in this case are of significant importance to New Zealand’s secondary markets and the FMA’s focus on ensuring that our markets are seen as fair and transparent places to do business," said FMA director of enforcement and investigations Belinda Moffat. "We are committed to raising confidence in financial markets and where we see conduct of concern we will take appropriate action.”

Milford has dropped Warminger from the investment teams for its funds, according to an amendment to a prospectus in June.

Managing director Anthony Quirk said at the time that Milford had embarked on improving its systems before the FMA launched its investigation after a period of rapid growth, and has appointed PwC to review its governance, risk and compliance capabilities.

BusinessDesk.co.nz

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