FMA sues Milford's Warminger

The Financial Markets Authority says it has filed civil proceedings in the High Court seeking pecuniary penalties against Mark Warminger for trading carried out while employed by Milford Asset Management.

The FMA said: "Following a thorough investigation, the FMA has reached the view that trading undertaken by Mr Warminger amounted to market manipulation in breach of s11B of the Securities Markets Act". 

The alleged offending trades took place between December 2013 and August 2014. The FMA said it fell into three categories:

• 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.

The FMA alleges that the trading had, or was likely to have had, the effect of causing the creation of a false or misleading appearance relating to the extent of active trading in the relevant securities or the supply of, demand for, price for trading in, or value of those securities.

The FMA’s director of enforcement and investigations, Belinda Moffat said, “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. We are committed to raising confidence in financial markets and where we see conduct of concern we will take appropriate action.”

Responding to the allegations, Mr Warminger’s lawyer Marc Corlett said he denied the allegations and would 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. The fact that the FMA asserts something does not of course make it so and we fully expect that fair-minded people will wait until the court process is complete before drawing any conclusions about Mr Warminger’s trading. 

“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.”

Mr Corlett said he and Mr Warminger did not intend to make any further comment at this stage.

The FMA declined further comment as the matter was before the court.

In June Milford agreed to pay $1.5m to settle FMA allegations relating to its role in the alleged market manipulation.

Milford managing director Anthony Quirk said the firm would not be commenting on the FMA’s action against Mr Warminger, other than to confirm he was on extended leave.

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