Milford Asset Management fined $1.5 mln for market manipulation, trader still in spotlight

Milford Asset Management has agreed to pay $1.5 million to the Financial Markets Authority over claims the high-profile fund manager engaged in market manipulation.

The Auckland-based firm will pay $1.1 million in lieu of a penalty and $400,000 to cover the market watchdog’s costs, while denying it’s liable for any breaches of the Financial Markets Conduct Act, the FMA said in a statement. The regulator claimed Milford Asset Management created a false or misleading appearance over the extent of active trading in a security or the supply of, demand for, price for trading in, or value of the securities. In cutting the deal, Milford denied it was liable for any breaches, though accepted its board had inadequate oversight and control of the trading conduct under investigation.

The settlement doesn’t include the trader, who is still under investigation by the FMA.

“We understand the role that the regulator has in ensuring that monitoring systems are at the highest international standards,” Milford managing director Anthony Quirk said in a separate statement. “We acknowledge that ours needed improvement in specific areas and this has been done.”

The investigation was made public in February, and led to the New Zealand Superannuation Fund suspending its New Zealand equity management mandate with Milford, valued at $281 million.

As part of the deal, Milford hired accounting firm PwC to review its governance, risk and compliance capabilities, which it says has led to a series of improvements in its trading activities, such as the introduction of centralised dealing, and the planned implementation of an investment management system.

Milford’s individual portfolio managers will no longer execute trades for their portfolios as part of the settlement.


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