$400,000 fine for manipulating market

Former Milford Asset Management portfolio manager Mark Warminger has been ordered to pay $400,000 after the High Court ruled he manipulated the New Zealand stock market on two occasions in 2014.

In May, Chief High Court Judge Geoffrey Venning found Mr Warminger manipulated the market in two trades but rejected eight other instances brought before the court by the Financial Markets Authority. The hearing was a civil case, meaning the judge had to decide on the balance of probabilities.

Mr Warminger is appealing the judgement, while the FMA is cross-appealing. The market watchdog said yesterday it was "currently considering the penalty judgement".

The starting point for the penalty was $500,000, and the judge applied a reduction of $100,000 to recognise Mr Warminger’s "personal circumstances". The discount was because Mr Warminger could no longer work in the financial sector, as he had done for nearly 20 years, and recent medical issues meant he was "unable to carry out other employment for which he is qualified, at least for a significant period of time",  the judge said.

As a result of the pecuniary penalty order, Mr Warminger automatically received a five-year management ban. Had Mr Warminger been prosecuted, the criminal penalty for his actions would have been a maximum fine of $300,000, or five years’ jail for each contravention.

The maximum penalty for a breach of the law is the greater of the consideration for the transaction, three times the amount of gain made or loss avoided, or $1million. The Financial Markets Authority, which brought the case against Mr Warminger, argued the maximum penalty the judge could impose was $3.8million, while Mr Warminger’s lawyers argued the maximum penalty would have been $2million.

Mr Warminger’s employer at the time, Milford Asset Management, reached a settlement with the FMA before the trial. It paid $1.1million in lieu of a pecuniary penalty, along with $400,000 in costs.

Justice Venning said he accepted Mr Warminger had not made any significant material gain from his conduct,  at most $16,000 having been made from one transaction. 

- Sophie Boot

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