An Auckland investor is facing investigation by New Zealand’s Financial Markets Authority (FMA) over alleged trade-based market manipulation involving shares of Steel & Tube Holdings. The FMA alleges that Franco Belgiorno-Nettis executed multiple trades between November 2020 and July 2023 through two ASB Securities accounts, which influenced the closing prices of Steel & Tube shares and created a misleading impression of the stock’s market activity.

The authority contends that 66 trades were designed to support the share price, purportedly for Belgiorno-Nettis’ benefit as a substantial shareholder. The FMA is pursuing declarations of contravention, civil penalties, and associated costs. Belgiorno-Nettis rejects the allegations, asserting that the regulator has misunderstood his actions and the context in which they occurred.

The investor traces the dispute back to interactions with ASB Securities, claiming the broker altered his limit orders without consent rather than rejecting them or consulting him. Belgiorno-Nettis alleges ASB adjusted prices by small amounts—typically a cent or two—impeding some trades and providing explanations he considers misleading. He maintains that these interventions by ASB prompted him to increase his trading activity to expose what he saw as unjust order amendments.

Beyond ASB’s conduct, Belgiorno-Nettis raised concerns in early 2023 about unusual trading patterns in Steel & Tube shares, particularly during closing auctions, which he believed artificially suppressed share prices. He discussed these issues with Steel & Tube’s chief executive, Mark Malpass, and formally lodged a complaint with the FMA in March 2023, urging an investigation into potential market manipulation.

Internal FMA documents reviewed as part of the matter indicate that after analysis of trading data, shareholder records, and broker information, the regulator found no evidence supporting the claim that market participants manipulated Steel & Tube’s share price downward. Investigations did not identify any broker, shareholder, or client responsible for abnormal selling activity in the stock.

While Belgiorno-Nettis persistently sought updates from the FMA on his complaint, the regulator began considering an inquiry into his own trading activity. Following a referral about his conduct from the exchange regulator NZRegCo in May 2024, the FMA launched a formal investigation in August. By September, Belgiorno-Nettis was notified he was under investigation and subsequently required to attend an interview.

Belgiorno-Nettis argues that ASB’s complaint to the exchange diverted regulatory scrutiny from the broker’s conduct to his own trading practices. He criticizes the FMA’s public statements, which acknowledged ASB’s intervention in his orders and commended the broker for preventing potentially problematic trading. He interprets this as evidence of bias, asserting the regulator should have scrutinized ASB rather than endorsing its actions.

The FMA counters these claims, with head of enforcement Margot Gatland emphasizing that the regulator thoroughly examined Belgiorno-Nettis’ initial complaint and found no substantiation for market manipulation allegations against other participants. Gatland also stated the regulator disagreed with Belgiorno-Nettis’ assessment of ASB’s order handling, noting that NZX participants are obligated to maintain orderly markets and ensure compliance with exchange rules.

ASB Securities declined to comment in detail due to privacy and ongoing proceedings but reaffirmed its responsibility to comply with NZX rules and to report any suspicious market activity to regulators.

Belgiorno-Nettis, who held over 1.2 million Steel & Tube shares at one point, maintains he is a long-term investor, not a manipulator. He began accumulating shares after concluding the market overreacted to the company’s operational challenges, visiting facilities and engaging with management to assess value. He estimates his losses at over $1 million as the share price declined from around NZ$1.72 in 2022 to approximately 28 cents recently. He argues such losses undermine the FMA’s suggestion that his trades aimed to prop up the share price for personal gain or to protect margin positions.

The investor is no stranger to protracted legal battles, having previously engaged in costly court disputes with Auckland Council over planning decisions. Undeterred by warnings about the potential length and expense of the current case, Belgiorno-Nettis describes the fight as a matter of principle and remains determined to contest the allegations.

For the FMA, the central issue is whether Belgiorno-Nettis’ trading created a false or misleading market impression. For the investor, the case represents a broader struggle against what he perceives as unfair treatment by both a broker and a regulator, shifting him from whistleblower to target.