Court orders $400,000 penalty against Mark Warminger

The finding Mark Warminger manipulated the market has had a major impact on him

Is Mark Warminger’s penalty too tough? Tim Hunter discusses the court’s ruling

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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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Hope Mark reviews the situation he has been in and where he wants to be going forward. It is likely that his health would be impacted by the case brought against him as he is being made an example of.

Move on and bear this cross of being made an example no more.

It is extremely unfortunate that Milford did not choose to stand by him and settle out of court like the Fay Richwhites and Hanovers (Watson & Hotchin) of the world.

The sun will rise tomorrow.

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The Hanovers as you say only settled out of court for a very small percentage of their investors, the rest got nothing. Well unless you count worthless Allied Farmers shares as something.

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Actually was a $18m out of court settlement - a very small %tage of the $1 billion plus lost.

So Milford could have stood by Warminger with its vast resources and settle out of court. Instead, Milford threw him to the wolves.

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In fairness, wasn't $18 million actually what, one fifth of the money that Hotchin and Watson filtered out of Hanover as a "dividend" to themselves prior to the company failing?

I seem to recall that "dividend" was around $100 million.

Whoops, nope, looks like that may have only been a part of it...according to this they took out around $200 million:
http://www.stuff.co.nz/sunday-star-times/740490/Defunct-Hanover-a-200m-c...

What a way to treat Kiwi investors.

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Milford's role was to protect its reputation and that of its fellow directors. From the moment this surfaced Warminger was flotsam to Milford.

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Cannot believe others were unaware / not in on it
Club Xerox again

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NBR - Does NZ period for someone convicted of these crimes to be barred from being employed by a financial services firm?
Think the US has 5 years...

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Thanks for your comment Bob. It's important to remember that Mark Warminger has not been convicted of a crime. He was found to have breached the Act in a civil lawsuit brought by the FMA, which carries different penalties from a criminal conviction for the same offence. The judge said Mr Warminger would be banned from management for five years.

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Like several people I know
Not cause of what happened - but more how they handled it

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Absolutely.

If you are part of the old boys' club or associated with the NZX, the matter would have been treated differently for sure.

Who can forget Mr Weldon's comments to the market with how well Clear Grain was going before he sold shares. And of course things weren't going well at all as we know all know.

Mark Warminger's QC should have asked the FMA and Court for an explanation and directive of how the law or regulations are applied so selectively?

Clear Grain : "NZX referring to Clear in its annual report in March as "demonstrating real momentum,"

A law suit on Clear Grain was filed in May 2012 - so NZX and Mark Weldon were fully aware in June when Weldon sold his shares that :

1. Grain was not doing well and NZX was taking a law suit against the ex-directors.

2. No attempt was made to correct the 'real momentum ..." comment from the Annual Report.

3. It took the Australians to disclose the information to the public before NZX even remotely thought of informing the market.

4. This statement speaks volume about the butt-covering that is already going on in NZX : ""I have nothing to add at this stage as we go through our various internal processes," NZX chairman Andrew Harmos told BusinessDesk in an email.

5. Of course, the NZX and FMA found nothing wrong as Weldon and NZX always behave in an exemplary manner when it comes to disclosure matters!

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It broke the rules he was expected to honor on behalf the investors.
Milford also broke the rues by not undertaking proper and sufficient supervision of their staff...(apparently without penalty)
How much more of this nonsense is going on or do we all have to wait until the pending colapse to find out.

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Incredible Mr Gaynor has remained very quite on this. If this sort of thing was happening elsewhere, he would be shouting from the rooftops. Just not right

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Hardly surprising, is it? Just as Mr Gaynor has been dead quiet on how the NZX got itself into such a bad state - through the actions of the one man Mr Gaynor credited with how wonderfully the NZX was performing, Weldon.

Any donkey can abuse a monopoly in the short term and make millions, Mr Gaynor. Took Clear Grain, Media Works and the discovery by Mr Tim Bennett that the NZX was bereft of talent and experience through the 'my way or the highway' management style of Weldon to wake the likes of Mr Gaynor to the monster they supported so exuberantly.

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Go and have a relaxing beer Mark - you have my sympathies.

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