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Australian corporate watchdog accuses Westpac of allegedly insider trading and licensing in a $ 12 billion ($ 9.3 billion) debt deal associated with the privatization of the nation’s largest electricity distributor.
The case presented by the Australian Securities and Investment Commission on Wednesday is expected to shed light on the trading of derivatives and the opaque world of the domestic market. controls according to assets in the second largest bank in the country.
Allegations Westpac is trying to rebuild its reputation after allegations of money laundering popular poll deteriorating behavior of the financial sector.
In a statement, Asic said allegations related to Westpac’s role in carrying out the largest interest rate swap transaction in Australia’s history on behalf of pension funds bought by Ausgrid energy company from the New South Wales government in 2016.
Asic complained that several Westpac traders and executives were aware that the pension funds had chosen the bank to cover the interest rate risk associated with the union debt agreement required for the purchase.
For two hours on October 20, 2016, the day Ausgrid’s deal was announced, Westpac carried out hundreds of trades that encouraged customers of pension funds to pay the prices they would have to pay for interest rate swaps. .
The pension fund consortium, which managed more than $ 300 billion in assets involving Australian Super and IFM Investors, could see prices moving to its detriment on the morning of the debt transaction, but could not know if Westpac, Asic, was allegedly trading.
Westpac said it took the allegations “very seriously.” Its shares gained 0.2 percent on Wednesday.
Analysts said the case could ruin Westpac’s efforts to restore its popularity stained when he paid a $ 1.3 billion fine last year for allegations of money laundering to Brian Hartze, then CEO, it cost him his job.
Elizabeth Sheedy, an expert in financial regulation at Macquarie University, said the case of insider trading is unusual because it was against an organization rather than individuals.
“In theory, the bank’s policies and systems should have prevented anything like this from happening, but we already know that Westpac’s operational risk management systems were not in place when the alleged incidents occurred,” he said.
Sheedy said the case would be important for Asic, who last year lost a lawsuit against Westpace in connection with responsible lending laws.
Nathan Zaia, an analyst with the Morningstar research group, said the allegations about Westpac were not badly reflected after a government-mandated public investigation into wrongdoing in the financial sector two years ago.
But he said the large investments made in corporate culture from 2016 onwards can help prevent major misbehavior in the future.
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