Business Editor for the NZ Herald

Mark Warminger's market manipulation trial begins today

Mark Warminger, a former portfolio manager at Milford Asset Management.
Mark Warminger, a former portfolio manager at Milford Asset Management.

The market manipulation case against Milford Asset Management's Mark Warminger begins today and will be keenly watched by members of New Zealand's finance industry.

Warminger, who has been on extended leave from his position as a portfolio manager at the firm since last year, is fighting the Financial Markets Authority's lawsuit, which is being argued before Chief High Court Judge Geoffrey Venning in Auckland over the next month.

The market regulator, according to a pre-trial judgment from June which ordered it to provide more details of its case, has alleged Warminger misused his privileged position with an institutional investor to trade shares not for a genuine commercial purpose but to increase their market price so he could transact significant off-market sales at a greater profit.

Its claim against him, for example, alleges certain trades of Fisher & Paykel Healthcare shares were likely to have created a false or misleading appearance of the extent of active trading and the supply, demand, price and value of that stock, the decision said.

Warminger could face a penalty of up to $1 million a trade if any of them breached market manipulation rules, which he has denied.

Warminger was one of the stars of Milford's investment team. He accepted Milford's trophy when the firm was named top fund manager, for the fifth year in a row, at 2014's Infinz finance industry awards. He joined Milford in 2011 and had previously been New Zealand head of investment strategy for Macquarie Private Wealth.

Before that, he managed two investment funds for Goldman Sachs NZ.

Prior to announcing its case against Warminger, the FMA reached a $1.5m settlement with Milford following a market manipulation probe. Milford rejected any liability in reaching the deal.

Following the investigation, Milford appointed PwC to review its governance, risk and compliance capabilities.

That review led to a series of changes in its trading systems, including the introduction of centralised dealing, through which staff who are not involved in funds management execute trades, the company said.

Milford, in a note to clients last week, said that its only role in the case would be through background evidence provided by executive director Brian Gaynor.

- NZ Herald

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