The trial of Mark Warminger is being held in the High Court at Auckland, and is set down for four weeks.

There are hefty financial penalties at stake if he is not successful in fighting the FMA’s allegations: He faces a penalty of up to $1 million per trade if he is found to have made trades that breached market manipulation rules.

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

The FMA said Warminger was under pressure over performance issues before he made the trades in question, between December 2013 and August 2014.

There are 10 causes of action against him.

Justin Smith QC, acting for the FMA, said Warminger is accused of misusing his privileged position with an institutional investor by placing trades in stocks in one direction to move the price so he could later shift significant off-market sales at a greater profit. This is known as cross-trading.

He is also accused of making trades to set artificial prices.

New Zealand's market was illiquid by international standards, which made it more susceptible to manipulation, he said.

Smith said Warminger managed funds worth $669 million.

But in mid-2014 questions were being asked about his performance.

The fund he was responsible for had been performing below the benchmark, and he was called into a meeting with Milford executive director Brian Gaynor and former managing director Anthony Quirk.

Shares in A2 milk had dropped substantially, which caused a decline in fund performance.

"This put him under a certain amount of pressure,” Smith said.

His remuneration package included a share of the company’s total profit, so there was a “very, very substantial” bonus at stake, too.

Witnesses are expected to be called tomorrow. Milford Asset Management itself is not involved in the case – it agreed to a $1.5 million settlement with the FMA. Gaynor will be called as a witness.

It earlier said Warminger’s decision to fight the allegations was a personal one.