Newly announced CommBank Chief Executive Matt Comyn will have his work cut out for him as the Australian Securities and Investments Commission (ASIC) commences legal proceeding against the bank for allegedly rigging key market interest rates.
The watchdog is taking the bank to the Federal Court in Melbourne on claims of unconscionable conduct and market manipulation for its alleged involvement in tweaking the bank bill swap (BBSW) between 31 January and October 2012.
“ASIC alleges that on three specific occasions the Commonwealth Bank of Australia (CBA) traded with the intention of affecting the level at which BBSW was set so as to maximise its profits or minimise its losses to the detriment of those holding opposite positions to CBA's,” ASIC stated in a media release.
“ASIC alleges it was unconscionable for CBA to trade in this way, and also to enter into products priced off the BBSW without disclosing its trading practices to its customers and counterparties. ASIC also alleges that CBA's trading created an artificial price and a false appearance with respect to the market for some of these products.”
CommBank is the last of the Big Four banks to face such charges. ANZ and National Australia Bank settled with ASIC, paying $50 million each including penalties, while the Westpac case is currently before the courts.
CommBank has denied the allegations and will defend itself against these allegations.
According to a CommBank statement: "As part of the industry-wide review into the trading activities of participants in the bank bill market, ASIC has today filed a claim against the Commonwealth Bank of Australia that alleges the bank engaged in market manipulation and unconscionable conduct in relation to the bank bill swap rate.
"Commonwealth Bank has fully cooperated with ASIC's investigation over the last two years.
"Commonwealth Bank disputes the allegations made by ASIC.”
ASIC is seeking pecuniary penalties against CommBank and an order for increased compliance. Neither party is making any further comment during court proceedings.
Read more at www.asic.gov.au
Are you a CommBank customer? How do you feel about the bank’s alleged misconduct and unscrupulous behaviour? Is ASIC losing its ‘toothless tiger’ reputation?
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