Sharesies trader investigated after claiming kitchen renovation anguish made him flip shares

The Sharesies trader said he felt annoyed after selling shares to fund home renovations, so bought some shares back - but the Financial Markets Authority had trouble accepting that story.

A Sharesies trader who made deals worth a few thousand dollars and used his partner’s account has been warned by a watchdog for suspected market manipulation.

The man told investigators he placed sell orders to fund kitchen renovations and was “gutted” he sold his shares to do so.

He claimed he then bought shares back to feel better.

The Financial Markets Authority alleged the man used his partner’s Sharesies account to place eight sell orders for shares and during the same period used his own Sharesies account to place 11 buy orders.

The FMA said the man used his partner’s account to place another four buy orders.

“A number of the buy orders had higher volumes than the prevailing best ask volume and higher price limits than the prevailing spread,” the FMA said today.

“These order terms allowed the key buy orders to clear the volume at the existing best ask price, then trade into the volume at the next higher price step.

“As a result, market spread and/or the last trade prices for the shares moved higher on at least 10 occasions.”

And it seemed the man’s complaints about trades being “suppressed” backfired on him.

The FMA said the trader sent messages to Sharesies complaining that buy orders at the lowest offer price were being held back, and that was “suppressing the price” of the shares in question.

The FMA did not disclose the trader’s name or the name of company in question.

The FMA said it investigated and found the man “likely breached” the Financial Markets Conduct Act.

It seemed he engaged in trading likely to have the effect of creating a false or misleading appearance regarding the price of shares for a listed company, the FMA added.

The alleged conduct happened in November 2021.

The FMA said a formal warning was the appropriate and proportionate response.

“Market manipulation is a serious breach of the law, even when the volume and value traded is low,” FMA General Counsel Liam Mason said.

The FMA shared the warning letter.

“You say that you have never intentionally tried to manipulate any share prices and that as far as you are aware, your trading ... did not affect the share price at any times,” the financial regulator told the man.

“You also stated that if you were trying to manipulate the share price, and the share price did not rise or fall, you would have stopped buying after three or four attempts.”

The letter added: “You stated that if you were attempting manipulative trading, there would be reference to it or discussion about it with others in emails or texts.”

But the regulator did not agree that somebody engaging in unlawful conduct would talk about it with third parties.

Sharesies appropriately detected and reported the conduct, the FMA said, and co-operated with inquiries.