The Australian Securities & Investments Commission (ASIC) has taken the Commonwealth Bank of Australia (CBA) to the Federal Court over allegations of unconscionable conduct and market manipulation.
ASIC’s allegations are in relation to CBA’s involvement in setting the bank bill swap reference rate (BBSW), described by ASIC as the primary interest rate benchmark used in Australian financial markets.
ASIC alleges that between 31 January 2012 and October 2012, CBA had a large number of products which were priced or valued off BBSW, and that on three specific occasions 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 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.”
According to CBA, the Commonwealth Bank has fully co-operated with ASIC’s investigation over the last two years, and disputes the allegations.
This latest court action is separate to the civil proceedings filed against CBA by the Australian Transaction Reports and Analysis Centre (AUSTRAC) last August, alleging a series of money-laundering breaches.
A separate class action was also previously filed against the bank by CBA shareholders, who suffered a significant share price drop following the announcement of the AUSTRAC allegations.