Share trader’s trial is first of its kind
The trial of a share trader accused of market manipulation began in the High Court in Auckland yesterday.
The Financial Markets Authority, which brought the case, said Mark Warminger, who worked for Milford Asset Management, was ‘‘under a certain amount of pressure’’ after issues about his performance were raised.
It is the first case of its kind to go to trial in New Zealand, after Warminger denied the allegations.
Warminger was named as the trader at the centre of the FMA’s high-profile investigation in July last year.
The FMA alleged that trading between December 2013 and August 2014 breached the Securities Markets Act, which amounted to market manipulation.
There are 10 causes of action against Warminger, made up of trading which is alleged to have or was likely to have created a false or misleading appearance of trading in a security.
The alleged conduct involved placing small trades directly on-market in one direction, followed by large offmarket trades in the opposite direction, trading which manipulated the closing price, and trading conducted to set the price, rather than for a genuine commercial purpose.
The FMA’s lawyer, Justin Smith, QC, said yesterday that Warminger made trades that were intended to influence the price of certain shares. New Zealand’s market was relatively illiquid, which made it more susceptible to manipulation, he said.
Warminger had more than 16 years’ experience in equities markets and had full autonomy over trades in his role as a portfolio manager at Milford.
Smith said Warminger managed funds worth $669 million, but by August 2014 performance and conduct issues were raised with senior management.
His fund had been performing below the benchmark, which resulted in a meeting with Milford executive director Brian Gaynor and former managing director Anthony Quirk.
Smith said Warminger’s period of underperformance formed the backdrop of the case. ‘‘This put him under a certain amount of pressure.’’
Furthermore, performance measures at the company were reviewed every six months, and Warminger’s remuneration included a share of the company’s annual profit.
‘‘There will be evidence the bonus for Mr Warminger was very, very substantial indeed, by comparison to his base salary,’’ Smith said.
Smith’s opening submissions before Justice Geoffrey Venning were expected to take today, before witnesses would be called.
Warminger is being represented by Marc Corlett and Mike Heron, QC.
Milford last year agreed to pay $1.5 million following an FMA investigation into market manipulation at the firm, which concluded that Milford’s board failed to ensure ‘‘the requisite degree of monitoring’’ of trading activity was taking place.