28 September, AtoZForex.com, Lagos – The Australian Securities and Exchange Commission led investigation has resulted to the incarceration of Mr Nigel Derek Heath over market manipulation activities. He pleaded guilty to charges relating to his trading in shares and contracts for difference (CFDs) in four resource companies between 16 February 2012 and 11 October 2013, during which he traded through nine separate share trading and CFD trading accounts.
Nigel Derek Heath, 51, is a day trader specialized in trading shares through CFDs. It was discovered that his trading activities distorted the market and increased the value of his own portfolio and free equity in his CFD trading accounts. This was done via his trading in nine separate share trading and CFD trading accounts.
Manipulation Activities
ASIC specified that between 16 February 2012 and 19 August 2013 Mr Heath carried out 138 transactions involving financial products relating to Petsec Energy Limited (PSA) that had the effect of artificially increasing the price for trading in PSA shares on the ASX. While the average value of the 138 transactions was $496, each transaction increased the PSA share price by between 4% and 11.5%, and increased the value of Mr Heath's shareholding in PSA by between $15,878 and $46,928.
Also, Mr Heath is found to have caused 30 simultaneous buy and sell transactions involving shares and CFDs relating to PSA, Leyshon Resources Limited, Malagasy Minerals Limited and Orca Energy Ltd. These transactions had the effect of artificially increasing the price for trading in those shares on the ASX. These trades, commonly referred to as 'matched trades', caused an increase to the price of shares traded on the ASX of between 3.1% and 6.9%.
How it affected the market
The CFD accounts employed by Mr Heath are operated on a direct market access model. This ensures that the CFD issuer hedges its exposure to a client’s trading position by causing a direct and equivalent position to be taken in the underlying security on the ASX. Hence, every order placed by Mr. Heath was simultaneously placed in the real market, therefore directly affecting the prices of the real shares.
About Nigel Heath jailed, ASIC Commissioner Cathie Armour said 'Any form of market manipulation undermines the integrity of our financial markets. ASIC is determined to protect our financial markets and bring those involved in market misconduct to justice.'
Sentencing
After pleading guilty to two charges of market manipulation, Mr Heath will now spend the next two years and three months in incarceration for his deeds. After nine months, he can be released on a recognizance release order, with self-surety in the amount of $10,000, to be of good behaviour for a period of 18 months.
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