Westpac acknowledged its receipt of ASIC’s claim in a statement to the Australian Securities Exchange on Wednesday morning. It’s a case that is likely to send shockwaves through major market players in the country,which have already been shaken by a cartel claim brought against ANZ and other banks over alleged price-fixing.
“Westpac takes these allegations very seriously and is considering its position having just received the originating application and concise statement of claim,” the bank said. The bank only last year settled the largest civil claim in Australian history agreeing to pay$1.3 billion for millions of anti-money laundering breaches.
The case relates to one of the biggest privatisation projects in recent Australian history,the sale of a 50.4 per cent stake in a 99-year lease of Ausgrid to the industry fund consortium for $16 billion.
ASIC alleges that on the day the NSW government agreed to the sale Westpac was already aware that it would be appointed by the industry super groups to arrange $12 billion of interest rate swaps to underpin the deal.
ASIC alleges that in receipt of that insider information Westpac made 876 trades between 8.30am and 10.27am on the morning the deal was signed to allegedly illegally profit at the expense of its own clients before the deal was publicly announced.
“Whilst in possession of the alleged inside information,Westpac’s traders acquired and disposed of interest rate derivative products in order to pre-position Westpac in anticipation of the execution of the swap transaction,” the regulator claims.
ASIC alleges the consortium members could see on the day that the markets were working against their expectations,effectively making the interest rate swaps it used to underpin the deal more expensive,but did not know why at the time. A source close to the industry funds said they sat back and watched in “horror” but did not assume their own arranger was orchestrating the situation.