Financial Markets Authority v Warminger - [2017] NZHC 1471

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV-2015-404-001727 [2017] NZHC 1471

UNDER The Securities Markets Act 1988

BETWEEN

FINANCIAL MARKETS AUTHORITY Plaintiff

AND

MARK WARMINGER Defendant

Hearing: 15 June 2017

Appearances:

J B M Smith QC, N R Williams and K S Graham for Plaintiff
M A Corlett QC, I Rosic and D C S Morris for Defendant

Judgment:

29 June 2017

JUDGMENT OF VENNING J ON PENALTY

This judgment was delivered by me on 29 June 2017 at 4.15 pm, pursuant to Rule 11.5 of the High
Court Rules.

Registrar/Deputy Registrar

Date……………

Solicitors: Meredith Connell, Auckland
Cook Morris Quinn, Auckland

Copy to: J B M Smith QC, Wellington
M Heron QC, Auckland
M A Corlett QC, Auckland
Financial Markets Authority
I Rosic, c/- Gilbert Walker, Auckland

FINANCIAL MARKETS AUTHORITY v WARMINGER [2017] NZHC 1471 [29 June 2017]

[1] In a decision delivered on 3 March 2017 this Court found that Mr Warminger breached s 11B of the Securities Markets Act 1988 (the Act) on two occasions.1 The Financial Markets Authority (FMA) seeks the imposition of a penalty for the breaches.

[2] The Court made two declarations of contravention under s 42V of the Act. The first was that Mr Warminger contravened s 11B by manipulating the market for shares in Fisher and Paykel Healthcare Limited (FPH) on 27 May 2014. He did so by increasing the offer quote and price for the shares and maintaining them at a higher level than otherwise would have been the case and then by entering a crossing for the sale of FPH shares which created a misleading appearance as the price of the crossing was influenced by his earlier trades.

[3] The second declaration was that Mr Warminger contravened s 11B of the Act by manipulating the market for shares in a2 Milk Limited (ATM) on 9 July 2014 by increasing the offer quote and price for ATM shares and maintaining them at a higher level than otherwise would have been the case. That created a misleading appearance as to the demand and/or price for ATM shares on the day.

Background and jurisdiction

[4] The background to Mr Warminger’s manipulation of trading in FPH and ATM shares is set out fully in the substantive judgment. It is unnecessary to repeat it here.

[5] The Court may order Mr Warminger to pay a pecuniary penalty it considers appropriate if satisfied that his contravention(s):2

(i) materially prejudices the interests of acquirers or disposers of the securities or relevant interests involved; or

(ii) materially prejudices the public issuer or, if the public issuer is a body corporate, its members; or

1 Financial Markets Authority v Warminger [2017] NZHC 327, (2017) 11 NZCLC 98-050.
2 Securities Markets Act 1988, s 42T(1)(c).

(iii) is likely to materially damage the integrity or reputation of any New
Zealand’s securities markets; or

(iv) is otherwise serious.

[6] There is no evidence presently before the Court of material prejudice to buyers or sellers of FPH and ATM shares…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

Keep reading for free

Create a free CaseChat account to read Financial Markets Authority v Warminger and more:

Read every judgment in full
Ask AI and get answers linked to paragraphs
See how each paragraph was cited in later cases
Download judgments as PDF or Word

Continue with Google

One click creates your free account or signs you in.

By continuing you agree to the Terms and Privacy Policy.

Details

Case: [2017] NZHC 1471
Decision Date: 29 June 2017

CaseChat Overview and Summary

The Financial Markets Authority (FMA) sought to impose a penalty on Mark Warminger for breaches of the Securities Markets Act 1988. The Court had previously found that Warminger contravened the Act on two occasions by manipulating the market for shares in Fisher and Paykel Healthcare Limited and a2 Milk Limited. The Court was required to decide the appropriate penalty for these breaches. The maximum penalty for the contraventions was calculated to be $3,845,900. The Court assessed the penalty using the criteria set out in the Act and relevant case law. The Court found that the contraventions were serious, particularly given Warminger's experience and the potential damage to market integrity and investor confidence. The Court also considered the lack of significant financial gain from the contraventions, Warminger's previous clean record, and his personal circumstances, including the impact of his medical condition on his ability to find alternative employment. The Court imposed a penalty of $400,000, to be applied to the FMA's actual costs.

Orders