Video | Agriculture | Confidence | Economy | Energy | Employment | Finance | Media | Property | RBNZ | Science | SOEs | Tax | Technology | Telecoms | Tourism | Transport | Search

 

Brian Henry admits market manipulation

Media release
MR no. 2014 – 26
7 August 2014

Brian Henry admits market manipulation

Brian Peter Henry has admitted all of the Financial Markets Authority’s (FMA) allegations that he breached the market manipulation prohibitions in the Securities Markets Act 1988. FMA’s claims followed a referral from NZX and arose out of Mr Henry’s trading in shares in the NZX-listed Diligent Board Member Services (Diligent).

At the Auckland High Court Mr Henry admitted his trading contravened section 11B of the Securities Markets Act 1988, and a pecuniary penalty of $130,000 has been imposed by the Court today.

Justice Venning said in his judgment, “The conduct that Mr Henry engaged in undermines the development of a fair, efficient, and transparent financial market. Such market manipulation is likely to undermine the integrity of the NZX and jeopardise the confidence of both overseas and domestic investors in the NZ security markets. A pecuniary penalty is appropriate.”

Mr Henry admitted six breaches of the Securities Markets Act 1988. On two occasions he executed ‘wash trades’, namely trading in Diligent shares with himself, which moved the Diligent share price without any change in the ownership of the shares. He admitted to creating a false or misleading appearance of trading in Diligent shares on four other occasions, by:

• placing multiple orders for buying (bids) and selling (offers) Diligent shares without completing the trade - otherwise known as ‘layering’. This is a practice that artificially inflates the share price and gives a false appearance of activity

• giving an artificial impression of the level of trading interest in Diligent shares

• forcing other buyers to bid at higher prices in order to trade

• setting the market closing price of Diligent shares.

Belinda Moffat, FMA Director of Enforcement, said “misconduct like Mr Henry’s undermines the integrity and trust in the fair and orderly operation of the equities market. The public want and deserve to invest in the markets with confidence that any trading activity reflects genuine supply and demand for shares in the market.”

This is the first case of market manipulation brought in New Zealand. Investigating and responding to misconduct in New Zealand’s secondary markets, whether it be insider trading, market manipulation or disclosure breaches is a priority area of focus for the FMA.

“There is a strong public interest in deterring share trading that is false and misleading. Where there is a case that meets the standard of evidence required and where court action satisfies the public interest, then FMA will take proceedings to ensure confidence in the development of fair, efficient and transparent markets,” said Ms Moffat.

ENDS

BACKGROUND

Section 11B of Securities Markets Act 1988

11B False or misleading appearance of trading, etc

A person must not do, or omit to do, anything if—

(a) the act or omission will have, or is likely to have, the effect of creating, or causing the creation of, a false or misleading appearance—

(i) with respect to the extent of active trading in the securities of a public issuer; or

(ii) with respect to the supply of, demand for, price for trading in, or value of those securities; and

(b) the person knows or ought reasonably to know that the person's act or omission will, or is likely to have, that effect.


© Scoop Media

 
 
 
 
 
Business Headlines | Sci-Tech Headlines

 

By May 2018: Wider, Earlier Microbead Ban

The sale and manufacture of wash-off products containing plastic microbeads will be banned in New Zealand earlier than previously expected, Associate Environment Minister Scott Simpson announced today. More>>

ALSO:

Snail-ier Mail: NZ Post To Ditch FastPost

New Zealand Post customers will see a change to how they can send priority mail from 1 January 2018. The FastPost service will no longer be available from this date. More>>

ALSO:

Property Institute: English Backs Of Debt To Income Plan

Property Institute of New Zealand Chief Executive Ashley Church is applauding today’s decision, by Prime Minister Bill English, to take Debt-to-income ratios off the table as a tool available to the Reserve Bank. More>>

ALSO:

Divesting: NZ Super Fund Shifts Passive Equities To Low-Carbon

The NZ$35 billion NZ Super Fund’s NZ$14 billion global passive equity portfolio, 40% of the overall Fund, is now low-carbon, the Guardians of New Zealand Superannuation announced today. More>>

ALSO:

Split Decision - Appeal Planned: EPA Allows Taranaki Bight Seabed Mine

The Decision-making Committee, appointed by the Board of the Environmental Protection Authority to decide a marine consent application by Trans-Tasman Resources Ltd, has granted consent, subject to conditions, for the company to mine iron sands off the South Taranaki Bight. More>>

ALSO: