The market manipulation legal saga involving Milford Asset Management portfolio manager, Mark Warminger, entered what should be its final phase last Friday as the deadline for lodging appeals passed, apparently without incident.
By close to end of business on Friday, neither Warminger nor the Financial Markets Authority (FMA) had appealed the March 3 decision, the Auckland High Court told Investment News NZ (IN NZ).
After Justice Venning found Warminger had breached market manipulation laws in two out of the 10 charges brought by the FMA, both parties had 20 working days to file an appeal.
However, appeals might still be accepted outside the official timetable “at the leave of the Court”, the Auckland High Court told IN NZ.
In his March 3 decision, Venning also gave the FMA and Warminger 20 working days to “file a joint memorandum setting out the process” to determine “the quantum of such penalty, and costs”.
According to the Auckland High Court, a memorandum was lodged on “behalf of the defendant” on Friday morning.
Under the law, Warminger could be up for a maximum fine of three times the amount of gain made or loss avoided, or $1 million for each breach.
Whatever the final punishment imposed, the Warminger decision should prompt fund managers and share brokers to review certain processes, according to law firm DLA Piper.
In a note, DLA Piper says: “The case is important as it brings clarity for the first time as to actual trading that took place, and the matters to which the Court will have regard in determining whether manipulation has occurred. These are fact based, and the conduct of the trader in each case will be relevant.”
But DLA Piper says the Warminger finding “does not provide black and white answers”.
“What it does do is give traders and trading firms an opportunity to reconsider their processes, and change them if additional checks and balances are required,” the note says.
“This may involve interposing another step before trades can be made, where higher risk may exist (including because of demand for, or lack of liquidity in, a security, or one where a trader may have a short or long position they need to correct), training, and demonstrating a culture of compliance.”