Inside Money: Milford settlement: the trader execution version

How easy is it to get away with market manipulation? What were the trades in question and who was on the losing side of skewed deals?

It's settled then.
Well, not quite.

The long-running investigation into alleged market manipulation charges at the $3 billion plus Milford Asset Management climaxed last week in a finely-honed settlement document - the result of lawyers going at each other for months.

In the "execution version" available for public view both the regulator and Milford agree, acknowledge, recognise and undertake to do various things.

As widely reported, Milford copped a substantial $1.5 million fine without admitting liability for any of the alleged market manipulation charges relating to an anonymous 'trader'.

Milford did issue a 'mea culpa' in regards to its governance systems - since upgraded.

And the 'execution version' indemnifies Milford and "its related entities, directors or employees" against further "investigation or civil or criminal legal proceedings" about the allegations.

All the above applies to all of Milford "except the Trader," the settlement document adds in brackets (who for the time-being remains officially unnamed).

The "enforcement processes regarding the trader are continuing", the FMA says.
Milford would continue assisting the regulator with its enquiries into the 'trader's' activities, the agreement says, including supplying evidence "in any forthcoming proceedings".

As well, the manager agreed to "procure availability and co-operation (for briefing purposes) from witnesses who are present or former employees of Milford".

The FMA has clearly left the door open to future legal action against the 'trader'. And if the case does end in court, the public may finally learn what all the fuss was about.

Because despite the reams of heavily-lawyered information now in circulation, few details about the actual market manipulation allegations are available.

The Milford agreement only refers to conduct that created a "false and misleading appearance" about the extent of trading in certain securities and the "supply of, demand for, price for trading in, or value of those securities".

How does a 'trader' go about such things?

This gaping hole in the narrative leaves critical questions unanswered, such as: what were the trades in question and who was on the losing side of any allegedly skewed deals.

The FMA has indicated it won't be digging over this ground too thoroughly but clearly there's more to come in this story.

And without an open examination of the facts of the case, the public could be left with the unsettling feeling that market manipulation in New Zealand is all too easy to get away with.