ASIC launches legal actions against ANZ for allegedly manipulating one of the most important interest rates in the financial system, the bank bill swap rate or BBSW. A corporate regulator brought the lawsuit and said that the statement of claim against ANZ has already been filed.
On, Friday, the Australian Securities and Investment Commission drafted a statement alleging that ANZ engaged in an unconscionable conduct, market manipulation, and breached its financial services license. The Sydney Morning Herald reported that ANZ denied such allegations, saying ASIC's claims were based on a misunderstanding of the relevant marker and limited case law in the area.
ASIC argues that for 44 days between March 2010 and May 2012, ANZ traded in a method that was intended to create an 'artificial price' in the BBSW. The bank bill swap rate is the main interest rate benchmark used in Australian financial markets for setting a range of business loan interest rates. According to The Australian, ASIC previously described this rate as of 'potential systemic importance.' ASIC said in a statement that ANZ's behavior is likely to have caused 'financial detriment' to clients with the opposite exposure to the BBSW, or products that were referenced to BBSW, to ANZ.
Nigel Williams, chief risk officer of ANZ, said the bank has cooperated fully with ASIC's investigation over several months, at a cost of millions of dollars. Williams said that ANZ will continue to review and evaluate the matter of chat messages between traders, as reported by Independent Financial Adviser. ANZ also said that ASIC's legal actions will considerably take time to be resolved through the courts and that the matter of penalties is uncertain at this point of time.
ASIC has been investigating Australia's major banks for three years over the manipulation of the BBSW between 2007 and 2013. In 2011, ANZ stood down seven traders, pre-empting the ASIC investigation and promising its own internal investigation into accusations of benchmark rate rigging.
