An Auckland-based retail investor has been ordered to pay a penalty of NZ$198,000 after being found liable for market manipulation on the New Zealand Stock Exchange (NZX). The ruling brings to a close a civil case brought by the Financial Markets Authority (FMA) against Kok Ding Cheng, who the court found deliberately placed a series of small buy orders in late 2020 to influence the price of shares in Rua Bioscience Limited (NZX: RUA).

Investor Ordered to Pay $198,000 in Market Manipulation Case

Between November 20 and November 30, 2020, Cheng placed five small buy orders for Rua Bioscience shares through his ASB Securities account. These orders ranged in size from 100 to 1,000 shares and carried values between $59 and $540 each. At the time, Cheng already held a material stake in the company-320,000 shares, purchased earlier that month at an average price of $0.57 per share.

The FMA alleged, and the High Court found, that these late-day orders lacked a genuine commercial purpose and were designed to push Rua shares higher at the close of trading. Evidence showed that the trades, mostly placed during the pre-close session, were inconsistent with Cheng’s normal trading patterns, which typically involved much larger volumes.

“The timing and size of the orders were hallmarks of closing price manipulation,” Justice Robinson wrote in the decision, noting that Cheng’s actions were more consistent with an intent to influence price than with legitimate share accumulation.

Manipulative Trades and Broker Controls

Of the five orders placed, only one was executed; the remaining four were blocked by ASB Securities’ automated compliance systems, which flagged the transactions as potentially manipulative. The trade that was executed-an order for 300 shares placed at $0.54 each-increased the closing price by one cent (approximately 1.9%), boosting the reported value of Cheng’s Rua holdings.

Broker surveillance played a central role in identifying the suspicious activity. ASB Securities reported the trades to the NZX frontline regulator, NZ RegCo, which in turn referred the case to the FMA for further investigation. According to the regulator, robust brokerage controls are critical to preserving the integrity of licensed markets.

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Court Findings and Penalty

The High Court ruled that Cheng’s conduct breached Section 265 of the Financial Markets Conduct Act 2013, which bans trade-based market manipulation. Specifically, any actions likely to create a false or misleading appearance of market activity or price.

In determining the penalty, the judge considered the deliberate nature of the conduct, sustained over several trading days, and the potential impact on market integrity. Although only one of the manipulative orders resulted in a trade, the court found that even unexecuted orders can be harmful, as they distort perceptions of demand and price among other market participants.

The NZ$198,000 penalty-set after a 10% reduction for Cheng’s lack of previous violations-will be paid to the Crown, after the FMA’s enforcement costs are covered.

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FMA’s Warning to Investors

FMA Head of Enforcement, Margot Gatland, said the case reinforced the need for vigilance among retail investors using online trading platforms:

“Market manipulation undermines confidence in financial markets because it means investors can’t trust prices or market activity to be genuine. We take cases of market manipulation seriously to ensure New Zealand’s markets reflect genuine supply and demand, in order to preserve their integrity and reputation.”

Gatland further urged all investors to familiarize themselves with their obligations under New Zealand market rules, emphasizing that breaches, whether large or small, threaten the fairness and transparency that underpin the country’s capital markets.

In mid-April, the FMA also issued a warning about an investment scam operating via WhatsApp that promised unrealistically high returns.