KEY POINTS:
Sharebroker Forsyth Barr has been fined $30,000 and client adviser Nola Norton $15,000 by sharemarket enforcer NZX Discipline after Norton failed to sound the alarm over a series of "unusual" client orders.
NZX Discipline says Norton should have taken steps to ensure her client wasn't attempting to manipulate the market, while Forsyth Barr could have done more to ensure Norton was mindful of the potential for market manipulation.
The fines and a reprimand from NZX Discipline are part of a settlement reached with Forsyth Barr following an action taken in relation to an alleged failure by Norton to have detected and questioned "unusual trading" by a client in securities between June 2006 and July last year.
NZX Regulation conducted an inquiry into trading in the securities during that period which established a number of trades were unusual in that the client, who was predominantly a seller of the securities, on a number of occasions purchased small parcels of the same securities on the same day. In some cases the purchases were made close to the end of the session.
NZX Discipline said Norton should have, but didn't, query the relevant orders to ensure her client was not seeking to manipulate the market. Nor did she refer the orders to Forsyth Barr's compliance officer for guidance.
Norton accepted that her failure to to so was in breach of NZX's Good Broking Practice rule.
Forsyth Barr accepted in this case it could have done more to ensure Norton was more familiar with NZX rules regarding market manipulation.
Forsyth Barr accepted that its failure to do so was a breach of NZX Participant rules.
NZX Discipline said all market participants and their client advisers needed to be vigilant when accepting client orders to ensure relevant rules and laws are not breached.
The Securities Commission yesterday said market manipulation was not a criminal offence during the period the trades in question took place.
Neither NZX nor Forsyth Barr would comment further on the case. The Business Herald understands Norton continues to be employed by Forsyth Barr.
