Superfund suspends Milford, FMA investigation nearly complete

The New Zealand Superannuation fund has suspended Milford Asset Management from managing its local active equities mandate, while the Financial Markets Authority says its investigation of the fund manager is nearly complete.

The Guardians of New Zealand Superannuation announced today it has suspended the mandate, worth $281 million and appointed in 2009, until the investigation into Milford is over. The funds will be managed internally in the meantime.

Milford outed itself in February as being investigated by the FMA, a probe which is understood to include alleged market manipulation. The firm has said the investigation concerns a single "trader" and "certain specific trades."

Milford is one of the country's better known fund managers, with funds under management of about $3 billion, including three KiwiSaver funds.

The FMA also put out a statement this afternoon, saying the “complex” Milford investigation is nearly complete and it will announce its findings soon.

“The Milford investigation concerns complex matters and is subject to a rigorous process, and is almost complete.  We expect to conclude the final investigation steps in the next few weeks at which point we will continue our engagement with all the parties based on our findings.  We hope to make a public announcement at that time or shortly thereafter,” FMA spokesman Andrew Park says.

 “Our investigation does not relate to, or raise concerns about, the security or safety of Milford’s client funds or assets.”

An NBR ONLINE source says the twin press releases from the Superfund and the FMA are "very interesting" developments.

Milford Asset Management responded with its own statement saying it is surprised by the decision of theSuper Fund to suspend its investment mandate before the FMA investigation is completed.  

Managing director Anthony Quirk says: “We have not commented on the specifics of the investigation because we respect the due process of the FMA investigation and are bound by a confidentiality order imposed by the FMA.

"We will continue to refrain from any comment that could be seen as undermining the investigation process or pre-empting the outcome. In the meantime we look forward to completion of the investigation and release of any findings."

In December, the Super Fund also cancelled fund manager AMP Capital’s local active equities mandate, which was valued at $257.5 million and appointed in 2003. The portfolio is also currently being managed internally.

On Tuesday, the Guardians announced it had reshuffled its New Zealand active equities team.

Brian Bourdot, who joined the super fund as a portfolio manager in 2013, has been appointed the new manager of NZ Equities, replacing former head Tim Mitchell, who will continue in the fund’s strategic development team.

Daria Murray, a former vice president of global equities at Alliance Bernstein, was appointed NZ Equities portfolio manager. The team also includes analyst Tip Piumsomboon.