Australia’s biggest bank taken to court in rate-rigging case

Vastavam web: Australia’s biggest bank, the Commonwealth, was today taken to court by the corporate watchdog over allegations it rigged the benchmark interest rate, the latest of several of regulatory probes into the embattled institution.The Commonwealth Bank of Australia (CBA) is already facing a civil case brought by Australia’s financial intelligence agency AUSTRAC for alleged “serious and systemic non-compliance” of anti-money laundering laws concerning thousands of transactions.The new case, filed by the Australian Securities and Investments Commission (ASIC) in Federal Court today, alleges that CBA engaged in “unconscionable conduct and market manipulation” when setting the bank bill swap reference rate (BBSW).

ASIC claimed that on three separate occasions in 2012, 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”.Australia’s three other major banks — ANZ, Westpac and National Australia Bank (NAB) — have also been probed by ASIC over rate-rigging claims.ANZ and NAB settled their cases before their trials began last October, with the banks paying 50 million Australian dollars (USD 40 million) each in penalties.

The case also prompted other Australian regulators to launch inquiries into the bank over its handling of the alleged breaches.The string of scandals engulfing the finance industry prompted Canberra to call a wide-ranging inquiry in November to restore faith in the massively profitable sector.Scandals in recent years have also hit the sector globally, such as the rigging of the Libor (the London Interbank Offered Rate) interest rate and of foreign exchange rates.