The Financial Markets Authority (FMA) of New Zealand today announced the completion of its investigation into certain trading activities between December 2013 and August 2014 by a trader employed by Milford Asset Management Limited (Milford).
The regulator found that the trading conduct broke the market manipulation prohibitions as stated in s11B of the Securities Markets Act 1988. The FMA also considers that the board of the company had failed to provide the necessary degree of monitoring of the trading activity.
The FMA concluded that the conduct of the trader in question created a false or misleading appearance with respect 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.
Given that Milford is the trader’s employer, the FMA found the company liable for the trader’s alleged breaches of the laws.
The FMA has reached an agreement with the company to resolve the issues relating to the case. Under the terms of the settlement, Milford has agreed to make payments totalling NZ$1.5 million (US$1.03 million). Milford will pay:
- $1,100,000 in lieu of a pecuniary penalty under s46A of the Financial Markets Act 2011
- $400,000 as a contribution to the costs of the FMA’s investigation.
Milford also appointed PwC to review its governance, risk and compliance capability and to provide recommendations regarding improvements to its trading systems and controls.
The current settlement does not include the trader, with the FMA continuing the enforcement processes concerning him.
To view the original text of the settlement, click here.