Australia's Administrative Appeals Tribunal has upheld the Australian Securities and Investments Commission's decisions to ban Tony Davidof, a former financial advisor, and Philip McLean, a former employee of Credit Suisse, from providing financial services for three years because they helped to manipulate the price of MINI warrants issued by the Swiss lender.

An ASIC investigation found that both men had taken steps to manipulate the price of the warrants by engaging in pre-arranged trades for the sole or dominant purpose of transferring a profit or loss from previous transactions. The tribunal found that they had both contravened s1041A Corporations Act 2001.

According to ASIC, Davidof knew that the forces of supply and demand did not govern the impugned transactions and had admitted that they were designed only to transfer a profit or loss arising from other transactions. It also averred that McLean's experience, training and involvement in the transactions should have alerted him to the likely breach of the market manipulation rules.

MINIs are a type of derivative product traded on the stock exchange. The underlying instrument of a MINI may be, among other things, a share, a share price index (including the S&P/ASX 200 index), a pair of currencies or a commodity.

It was in January when the AAT upheld Davidof's appeal against his ban, finding that the MINI warrants in his case were not 'derivatives' according to the Corporations Act and therefore not financial products. In June, however, Justice Lee of the Federal Court (to which ASIC had appealed) reversed this, finding that the MINIs were a financial product and referring the matter back to the AAT for further scrutiny.

In 2012-13, according to ASIC's investigation, McLean took part in back-to-back buy and sell trades in MINIs on the Australian Stock Exchange with a third party after the pair had pre-arranged the price, volume and approximate timing of the trade. On each occasion, in the preceding days, McLean had traded shares and ASX SPI 200 index futures, derivative products that track the value of the S&P/ASX 200 index, on behalf of the third party resulting in a profit (in December) and a loss (in February) for the third party.

ASIC found that the prices at which McLean and the third party arranged to trade MINIs were designed to transfer the profit/loss from all the preceding trading. This was likely to have the effect of creating an artificial price for trading in the affected MINIs on the exchange.