A penalty of $400,000 has been imposed on fund manager Mark Warminger by the High Court for two counts of market manipulation in breach of the Securities Markets Act.
That finding and its associated penalty are subject to appeal in a hearing expected in October.
In a judgment delivered yesterday, Justice Geoffrey Venning said the maximum penalty for the combined offences was $3.8 million, agreeing with the submission of Justin Smith QC, counsel for the Financial Markets Authority.
The figure was arrived at in accordance with the act, which says the maximum penalty is the larger of the amount involved in the offending trades, three times the gain, or $1 million.
In this case the amount involved in the offending Fisher & Paykel Healthcare trades was $2.8 million, while the trades in A2 Milk qualified for the $1 million maximum.
Justice Venning said while the trades took place over only two days, “the court has found it was deliberate conduct by a very experienced market trader in an attempt to take advantage of parties on the other side of the transaction.
“Mr Warminger has 16 years' experience in equity markets and had been recognised as the INFINZ fund manager of the year for three years preceding 2014. He was trusted by Milford to conduct a substantial part of the trades for its funds. So while the breach was not ongoing as in a number of other cases, it is still serious.”
However, several considerations had to be taken into account in mitigation, the judge said. They included Mr Warminger’s previously unblemished record, his mandatory five-year ban from management, a previous $1.5 million payment in lieu of penalty and costs by his employer Milford Asset Management.
As a result, the starting point for a penalty was $500,000, he said, which was reduced by $100,000 to take account of a health issue.
“I accept that the finding Mr Warminger has manipulated the market has had a major impact on him. His entire working life of almost 20 years has been in the financial sector, either as an analyst or fund manager. Given the publicity associated with these proceedings and the outcome, that career will not be open to him in the future,” said the judge.
“That, however, is always likely to be the situation in cases of this nature. What makes Mr Warminger’s position different is that his recent medical issue has meant he is unable to carry out other employment for which he is qualified, at least for a significant period of time. I take into account his medical condition and its effect on him.”
The money to be paid by Mr Warminger will go towards the FMA’s legal costs.
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