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Judgment confirmed in the FMA v Warminger

31 July 2017

Judgment confirmed in the FMA v Warminger as appeals withdrawn

Mr Mark Warminger has withdrawn his appeal against the High Court judgment in the Financial Markets Authority v Warminger and as a result the FMA has withdrawn its cross-appeal.

The judgment from March 2017 and penalty decision from June 2017 stand and this brings these civil proceedings to a close.

In the High Court Venning J found that, in relation to two of the causes of action, Mr Warminger had committed market manipulation. The court found he had engaged in conduct which 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 High Court ordered that Mr Warminger pay a pecuniary penalty of $400,000 for these breaches of the Securities Markets Act 1988. As result of the finding, an automatic five year management ban applies to Mr Warminger.

The penalty judgment notes, “The Court has found it was deliberate conduct by a very experienced market trader in an attempt to take advantage of parties on the other side of the transaction.”

The penalty judgment further adds that the “conduct the court found proved was likely to materially damage the integrity or reputation of New Zealand’s securities markets.”

Rob Everett, FMA Chief Executive, said “this result demonstrates there are serious consequences for this type of misconduct. Market participants and the public want to know that the law is being upheld, and where there are instances of market manipulation and misconduct, those responsible will be held to account. We are satisfied that our regulatory objectives have been achieved in taking these proceedings.

Maintaining and promoting the integrity of New Zealand’s financial markets is a core part of our mandate and we will continue to respond vigorously where we see misconduct.”

The pecuniary penalty of $400,000 imposed on Mr Warminger will go towards the FMA’s costs.

On 18 June 2015, the FMA announced an agreement with Milford Asset Management arising from this trading conduct. Milford and its board accepted responsibility for inadequate oversight and control of the trading conduct, and the failure to identify and monitor the activity, or to assess whether the activity was appropriate.

Following completion of the FMA investigation into the trading conduct, Milford made a payment in lieu of a penalty of $1.1m and contributed $400,000 to the FMA’s cost of the investigation. It has completed implementing changes to its trading systems and controls recommended in an external review by PwC.

The legal proceedings relating to these matters are now complete. The FMA will continue to engage with market participants about the market conduct issues that arose in this case and the lessons that can be taken from it.


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