An ASIC investigation has led to Mr Nigel Derek Heath, a day trader from Wahroonga, NSW, pleading guilty today in the Downing Centre Local Court to two market manipulation charges.

Mr Heath, 51, pleaded guilty to charges relating to his trading in shares and contracts for difference (CFDs) in four resource companies between 16 February 2012 and 11 October 2013. During this period, Mr Heath traded through nine separate share trading and CFD trading accounts.

ASIC alleges that between 16 February 2012 and 19 August 2013, Mr Heath carried out 138 transactions involving financial products relating to Petsec Energy Limited (PSA). Each of these transactions artificially increased PSA's share price by between 4% and 11.5%, and increased the value of Mr Heath's shareholding in PSA by between $15,878 and $46,928.

ASIC also alleges that between 2 July 2012 and 11 October 2013, Mr Heath caused a simultaneous buy and sell in 30 transactions involving financial products relating to PSA, Leyshon Resources Limited, Malagasy Minerals Limited and Orca Energy Ltd. Each of these transactions – commonly referred to as 'matched trades' – artificially increased the price of shares traded on the ASX by between 3.1% and 6.9%.

Mr Heath will appear before the New South Wales District Court for sentencing on 31 October 2014.

The Commonwealth Director of Public Prosecutions is prosecuting the matter.

Background

The market manipulation offences under sections 1041A and 1041B of the Corporations Act 2001 each carry a maximum penalty of $765,000, imprisonment for 10 years, or both.

A CFD is an agreement between an investor and a CFD issuer which allows a trader to speculate on future price movements in a financial product such as shares. The value of a CFD roughly corresponds to the value of the underlying financial product, in this case, shares on the ASX.

The CFD trading accounts used by Mr Heath operated on a direct market access model, under which the CFD issuer hedges its exposure to a client’s trading position by causing a direct and equivalent position to be taken in the underlying security on the ASX.

Editor's note:

This matter was mentioned on 31 October 2014. The sentencing hearing is now scheduled for 27 March 2015.

Editor's note 2:

The sentencing hearing is now scheduled for 21 May 2015.

Editor's note 3:

On 21 May 2015 the sentencing did not proceed and was rescheduled to 27 August 2015.