Paper Example on Felix's Attempt to Exploit Market Systems

Question 1

Based on the details highlighted in this discussion, there was a desire by Felix to contravene the market systems to ensure that he manages to benefit from the trading process at the expense of others. It is possible to state that there was an introduction to activities that were intended to mislead people in the market. When Felix requested for re-booking of the shares, an activity that the stockbroker has never undertaken when facilitating the trading process, it can be noted that there is an attempt to follow a process that is not right.

Is your time best spent reading someone else’s essay? Get a 100% original essay FROM A CERTIFIED WRITER!

Save 25%

Felix contravened s 262 due to the provision of materially misleading information and due to the failure to disclose all the details about the trading arrangement. In this transaction, there are other parties that are involved in the trading process. They are the Schumann, Mendelssohn, and Wieck brokering firm that is involved in the buying and selling of shares. All these parties are supposed to have all the details about the transaction process and financial arrangement that are involved in this transaction to ensure that they are all following the required laws in the market. However, the brokering firm is instructed by Felix to re-book the shares to Schuman, which is a practice that the Wieck Firm has never undertaken, and it is not clear why it is being instructed to do that.

When the brokering entity requests for information on the financial arrangement between the two companies, these details are not provided. Based on NZX rules, where shares are transacted in the market, there must be a change in their beneficial ownership. However, the activities taken in this transaction seems like it is intended to correct errors and not change the beneficial ownership. It is clear that this is why Felix and Robert do not allow the brokering form to have full details of the whole transaction and financial terms between them, even though the broker has doubts as to why the re-booking is happening. The broker undertakes the trading process by making assumptions and not relying on the right information that is provided by the other parties. The brokerage entity assumes the re-booking is “for us to get paid,” which does not seem to be the right motive by Felix and Robert.

Some of the criminal and civil liabilities that may be raised against Felix include pecuniary penalty, which may include instituting a fine that is three times the profit made or the loss that was avoided. The re-brokering process was estimated to correct errors and Felix will be required to make a payment that is thrice the amount of errors corrected. Felix can also be imprisoned for a period not exceeding five years or a fine that does not exceed $500,000.

Question 2

Market manipulation in New Zealand is working on policies that will help in managing the traders that are against the Financial Markets Conduct Act 2013 regulations, and there is a need to ensure that it is not happening. The government is playing a key role in ensuring that the manipulation process is managed, and this is through introducing strict laws to manage the sector. The fines highlighted under the civil and criminal liabilities are applied whenever an individual or an entity is found to have acted against the provisions highlighted in the Financial Markets Conduct Act 2013.

The government calls for the need to ensure that people owe an element of confidentiality to an organization. The traders are not supposed to avoid a loss or make a gain based on details that are not accessible to the public domain. The trading laws in this country are based on efficiency ensuring, that any party that has insider information is not allowed to per take in the trading process. The insider trading regime in New Zealand works towards ensuring that the trading process is efficient, fair, promote the investors’ confidence, and makes sure that there is transparency in the financial products. The process of ending the market manipulation in New Zealand calls for the need to have timely and accurate details among all the persons involved in a trading process, for this will help in facilitating an effective decision-making process.

The debates raised concerning the manipulation in this market claim that the country is not effective in managing the issue because there is minimal prosecution of persons that may have contravened the Conduct Act 2013 in comparison to what has happened in Australia. However, what people do not understand is that there is a difference between the harm that a country wants to avoid when it is undertaking these restrictive measures. Australia’s trading regime, which is compared to the New Zealand system, focuses on information nature, and this tends to capture a wider network of traders. Therefore, the country has a wide number of convictions in comparison to New Zealand. Applying the fines and penalties highlighted in the country’s regularity mechanism is one of the effective ways of ensuring that market manipulation processes are managed in New Zealand.