Milford Asset Management has confirmed its settlement agreement with the Financial Markets Authority (FMA), announced today.
The settlement follows the completion of the FMA’s investigation into Milford’s role in certain trading by an individual employee over a specific period in 2013-14.
Milford Managing Director Anthony Quirk said the company was pleased the investigation had been concluded. He said it was important to note that, as stated by the FMA, the investigation had not related to the security of client funds or assets.
“This rules a line under the investigation from Milford’s perspective and we are now looking forward to focusing completely on continuing to deliver returns to our investors,” Mr Quirk said.
“We understand the role that the regulator has in ensuring that monitoring systems are at the highest international standards. We acknowledge that ours needed improvement in specific areas and this has been done.”
The FMA and Milford have agreed that the company failed to ensure that there was the requisite degree of monitoring of the trader and the relevant activity. The settlement agreement records that the company has carried out a thorough review of its systems and processes, and has undertaken a programme of improvement for its trading systems and controls. It has also appointed international business consultants PwC to review its governance, risk and compliance capability and provide recommendations.
Mr Quirk noted that the review referenced in the settlement agreement had been initiated by Milford before it was aware of the investigation. “As a result we have upgraded our trading activities, including the introduction of centralised dealing and the imminent implementation of a globally recognised investment management system. We believe this will move Milford to international best practice. One feature of this is that all trades are now executed by a separate dedicated team not involved in the management of funds.
“Meanwhile we are positively committed to the extra step of implementing the PwC recommendations. Based on the report by PwC Milford is consistent with or ahead of current New Zealand market practice in 14 of the 17 areas assessed. We certainly intend to build on that position – we are currently enhancing the three areas where PwC found we were below the norm. This will place the company at or above New Zealand market practice in all 17 areas reviewed by PwC, which is a very strong position for the future.
“We believe that the business has already built on the experience, and has emerged even stronger and will continue to provide great service and returns for our clients.”
