Financial Markets Authority accuses New Talisman Gold Mines' chief executive of 'market manipulation'

Thursday, 12 August 2021

Gold mining and prospecting is conducted by many sharemarket-listed companies.

The chief executive of an NZX sharemarket-listed gold mining company has been accused of market manipulation by making anonymous posts on an investment forum.

The Financial Markets Authority (FMA) said it had filed civil High Court proceedings against Matthew Geoffrey Hill, chief executive of New Talisman Gold Mines, for “alleged information-based market manipulation and making false and misleading representations”.

Karen Chang, the FMA’s head of enforcement, said the case related to anonymous posts Hill allegedly made about the company on the Sharetrader website’s online investor forum.

The FMA claims that between February 2013 and July 2020, Hill made dozens of posts on Sharetrader in a thread about New Talisman under two usernames, “bullish” and “Epithermal”, Chang said.

The NZX was the target of a prolonged DDoS attack in 2020 (video first published in 2020).

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Chang said New Talisman Gold was not party to the proceedings.

Karen Chang, the Financial Markets Authority’s head of enforcement.

As well as being chief executive, Hill is also a director and shareholder of New Talisman, Chang said.

She said Hill did not disclose his involvement in the company in the posts.

Hill’s conduct was revealed in July 2020 when Sharetrader publicly identified him as the person behind the usernames, Chang said.

Charbel Nader, chairman of New Talisman Gold Mines said the company was not aware of any further details about the FMA’s claim, other than what was contained in the announcement.

“This civil claim is now before the courts who will ultimately decide its merits. In the meantime it would be premature for us to prejudge the outcome,” Nader said.

“Market manipulation undermines confidence in financial markets, especially if it is by a senior executive at a listed company,” Chang said.

“We considered Mr Hill’s conduct warranted a strong response to demonstrate that such actions will not be tolerated, and to maintain confidence in New Zealand’s markets.

“This case is an important reminder that information-based market manipulation can occur on social media and forums, where investors are increasingly gathering to discuss stocks. Investors should be careful when using forums to inform their investing decisions as they can be exploited by vested interests.”

“We acknowledge Sharetrader’s efforts to moderate its forum and for bringing this issue to light.”

The proceedings had been filed in the Auckland High Court, she said.

“The FMA claim is based on two causes of action for alleged market manipulation under the Financial Markets Conduct Act 2013 (FMC) and the Securities Markets Act 1988, and an alternative cause of action for alleged false or misleading representations, a breach of fair dealing provisions in the FMC Act,” she said.

The FMA was seeking from Mr Hill a declaration of contraventions, a pecuniary penalty and costs.

In a statement posted on the NZX, Nader said: “We have previously complained to FMA and Tarawera Publishing Limited, operator of the Sharetrader website, about lack of moderation on the Sharetrader website, contrary to Sharetrader’s own terms and conditions.

“We remain hopeful that FMA will take appropriate action in respect of our complaints. We continue to call for online publishers to be regulated, and proactive regulatory guidance to be issued, on the use of social media by investors, issuers, intermediaries, and other market participants and their employees.”

New Talisman Gold Mines is one of the smaller companies with shares listed on the NZX. The company has a total value of $8.37 million, according to the NZX. Each of its shares was worth $0.003 on Wednesday.