The Financial Markets Authority (FMA) has issued a warning to an individual in relation to suspected market manipulation. Following an investigation by the FMA, it concluded that trading by the individual in question has likely breached the Securities Markets Act 1988 (the Act) in the following ways:
The FMA has assessed the conduct involved and notwithstanding its conclusion that the Act has likely been breached, it has determined that the appropriate and proportionate response in this case is to issue a warning to the individual. Factors specific to this case that were taken into account in making this decision included:
While the Act does not protect those who engage in market manipulation from liability on the basis of being inexperienced traders or being unaware of the legislative provisions, the FMA considered that this was nonetheless relevant to assessing intention and in determining the appropriate and proportionate regulatory response.
The purpose of the publication of the basis for the warning and the facts involved is to increase awareness of the required conduct around trading of shares in New Zealand’s financial markets. The object of the market manipulation provisions in the Act is to protect and preserve the integrity of the share market against activities which will result in artificial or managed manipulation. The provisions seek to ensure that the market reflects the forces of genuine supply and demand. The type of misconduct that the FMA has identified in this case is illustrative of conduct which has potential to have a serious impact on the fairness, efficiency, transparency and development of financial markets. The conduct may have given a false or misleading appearance of the volume and/or price of the shares in question.
It is important that the FMA takes action that denounces and deters such conduct in order to protect the integrity of the market and to ensure that those who trade are aware of the requirements and consequences.