Warminger, a Milford Asset Management portfolio, is currently fighting Financial Markets Authority (FMA) allegations that he breached securities law, in a trial at the Auckland High Court.

The FMA claims that 10 of Warminger’s trades, between December 2013 and August 2014, involved cross-trading and making trades to artificially set prices.

Earlier in the week, the defence’s star witness, Professor Michael Aitken, said his analysis had revealed “nothing unusual” in Warminger’s trading activity.

He said he did not believe that it created a false or misleading impression of price.

But, on Wednesday, cross-examination by the FMA’s lawyer, Justin Smith QC, revealed that Aitken’s evidence was based on his interpretation of the trading data, rather than additional information which might indicate intent.

Aitken said he would have only looked at additional information, like email chains between Warminger and other parties, if he thought something was amiss based on the seven tell-tale signs of market manipulation. 

“I wouldn’t look at purpose, or ask to look at more information, unless I had signed off on at least four of the signs that I have outlined.

“My job is to try and work out if the trading activity had a false and misleading impression on the price.”

The trading data from Warminger’s trading activity was simply not consistent with market manipulation as a whole, Aitken said.

However, Aitken also said that there was a fundamental difference with one of Warminger’s trading causes of action.

A few of his market manipulation signs came up when he examined Warminger’s Xero trades and, for this reason, he thought the Xero trades needed to be looked at more carefully.

Milford’s head of investments Brian Gaynor followed Aitken on to the stand. He gave evidence on Warminger’s performance at the time of the alleged market manipulation.

Gaynor said Warminger was given a negative performance review after the FMA launched their inquiry.

This was because Milford took the FMA allegations seriously and was concerned they exposed Milford to unacceptable risk, he said.

Warminger has been on extended leave from his role at Milford since last year.