FMA fines Milford Asset Management

milford-logo18 June, Lagos  Milford Asset Management Limited (Milford), a boutique investment firm has cooperated with the Financial Markets Authority (FMA) of New Zealand, as the regulator probed into some of the investment firm’s trading activities,by one of the firm’s traders, spanning between December 2013 and August 2014 as FMA fines Milford.

The FMA discovered that certain laws were broken by the trader during his operations for Milford, specifically the “market manipulation prohibitions as stated in s11B of the Securities Markets Act 1988.” To this effect, the regulators have levied a fine on the investment outfit, for reasons that the board of the company had failed to provide the necessary degree of monitoring of the trading activity.

According to the regulator’s report on the case, the FMA concluded that the conduct of the trader in question created a false or misleading appearance with respect to: the extent of active trading in the relevant securities; or the supply of, demand for, price for trading in, or value of those securities. Since the trader was under the employment of Milford, the FMA found the company liable for the trader’s breaches as the firm failed to duly supervise its activities, hence allowing for the trader’s misconduct.

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This prompted the investment firm to hire the services of PWC to review its governance, risk and compliance capability and to provide recommendations regarding improvements to its trading systems and controls.

In conclusion, the FMA and Milford have reached a compromise over the case. According to the FMA report, “under the terms of the settlement, Milford has agreed to make payments totalling NZ$1.5 million (US$1.03 million). Milford will pay. $1,100,000 in lieu of a pecuniary penalty under s46A of the Financial Markets Act 2011. $400,000 as a contribution to the costs of the FMA’s investigation.”

Click here for the full FMA report.

A few weeks back, we also reported that FMA had confirmed more stiff measures towards operations of offshore firms. The regulator confirmed that offshore firms have been removed from the Financial Services Provider Register, which is commonly abbreviated as FSPR. The move was meant to promote check and balance against the registrar.

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