If the allegations of market manipulation made against Milford Asset Management portfolio manager Mark Warminger were true the performance fee benefit would have been just $600, the High Court has been told.

Warminger is accused by the Financial Markets Authority of market manipulation in 10 trades in 2014.

The prosecution said that he had meetings with senior management in August 2014 over the funds under his management underperforming their six-monthly benchmarks and that the poor performance had put him under a certain amount of pressure.

But the 40-year-old portfolio manager, who is on extended leave from Milford, said even in the worst case scenario the impact of his alleged manipulative trading was only a few hundred dollars on the performance fee and the clients of the five wholesale equity funds he managed would have been better off by only $52,000.


That was based on a spreadsheet he had worked out on the likely benefit if the market manipulation allegations were true, covering an average of $678.5 million worth of funds under his control during that year and including brokerage fees.

Only three of the five funds Warminger managed at the time could earn performance fees and the only one that fell within the period of the alleged market manipulation accounted for just 3 per cent of the total funds under his management.

The FMA's expert witness John McMahon said although Warminger's funds didn't have much ability to earn performance fees, other Milford funds did.

Warminger said the spreadsheet included all funds under his control and the other Milford funds would only have benefited from the trading if he had pushed the price up on the close of trading on March 31 and September 31 because they were crystallisation dates for performances.

"So hopefully that lays that one to rest," he said.

When asked by his lawyer, Marc Corlett QC, whether he had experienced underperformance relative to the benchmark before, Warminger said after running high active equity funds for 16 years and going through the tech crisis, the global financial crisis, and volatility along the way, he had generally had very good performance, "but there had been times I underperformed for four, five, six months. It was part of the business and you just had to wear it and get on with it."

Warminger told the court he "never intended in any of these transactions to manipulate the market".

He was an unusually active trader - potentially around 250 trades a week - because of the types of fund they were and the need to perform above the benchmark.

The first course of action relates to trades in Fisher & Paykel Healthcare shares on May 27 2014 where the FMA accused Warminger of making several small buy orders during the day starting at $4.32 and ending in a final buy order of $4.34 which effectively moved the market price closer to the level he later sold a larger volume of shares for.

Warminger said that he regarded an earlier indication from Mandy Pettit of Forsyth Barr on that day that it was a firm buyer of FPH stock as a "fishing expedition" and that it wasn't a firm offer because it didn't indicate a price.

"To me, the Forbar (Forsyth Barr) email meant potentially it might buy 450,000 FPH but I read it with the experience of Forbar would offer you a potential trade and then they were not there to carry things through," he said.

Warminger replied he would only sell at $4.35 because he was a volume seller and thought the stock was breaking into a "new range" of at least $4.35 after trading at that level the previous day following a good financial result. FPH traded at $4.90 in the next few weeks, he said. "In hindsight, I probably gave the stock away."

"There was nothing unusual in the way I accumulated cheap stock that morning. I was happy to buy at the ask given the prices on offer. What was unusual was why so many shares were on offer," he said.

The FMA said Goldman Sachs was influenced into entering the first crossing with Warminger when it bought shares off him at $4.35 because of his earlier on-market trades but Warminger said it was nonsense that his trading had any inappropriate impact.

When interviewed by the FMA, Goldman Sachs said it was short in the stock and needed to buy it back at some point.

"Notwithstanding that they were in fact selling and therefore increasing the short position they would then need to cover, the FMA let the matter pass, instead then questioning me for simply acquiring so many shares at a lower price than I later sold a greater number of shares at," Warminger said.