FMA must reveal more of Warminger case

The Financial Markets Authority has been told it must provide more details of the case it is taking against Milford Asset Management portfolio manager Mark Warminger.

Monday, June 13th 2016, 6:00AM 1 Comment

Warminger has been on extended leave from the fund management firm since last year, when the FMA's investigation into his trading first came to light.

He is to fight the lawsuit, which is expected in court later this year.

The FMA says he used his role at Milford to trade shares to increase their market price, so he could then make more money from off-market sales.

The claim includes 10 causes of action.

One allegation relates to trading in Fisher & Paykel Healthcare, on May 27, 2014.

The company had recently announced its annual result. Warminger went on market to buy shares, trading at $4.31. He then sold them off-market at $4.35.

The FMA says this is suspicious because he had access to the market through Macquarie's Direct Market Access, and knew from contacts that Forsyth Barr and Goldman Sachs wanted to take big parcels of FPH.

He indicated he might be willing to sell at $4.35, and in the meantime made a series of small trades. It is alleged he used Direct Market Access to move the bids from $4.31 to $4.34.

But his legal team last month went to court to ask for more details of the FMA claim. His lawyer said it did not specify the actual misleading appearance that had allegedly been given.

The FMA replied it was obvious and unrealistic to claim he did not understand.

But in a decision released last week, Justice Raynor Asher said the way the trades had the effect of creating a misleading or false appearance needed to be spelt out. "It's too important to be left to inference," he said.

“I envisage that the particulars to be provided, having referred back to the pleaded conduct, will assert that the defendant manipulated the market by appearing to purchase shares when the transactions were not driven by supply and demand, but instead were designed to artificially move the market upwards so that the defendant could achieve off-market sales at a higher price than would otherwise by the case," the judge said.

Tags: Milford Asset Management