The corporate regulator has commenced civil penalty proceedings against the Commonwealth Bank for “unconscionable conduct and market manipulation” over its involvement in setting the BBSW in 2012.
The Commonwealth Bank is the fourth of the major Australian banks to face court over the setting of the bank bill swap reference rate (BBSW) – the primary interest rate benchmark used in Australian financial markets.
ASIC alleges that between January and October 2012, the Commonwealth Bank “traded with the intention of affecting the level at which BBSW was set so as to maximise its profits or minimise its losses” in a way that was detrimental to those holding positions opposite to the bank’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,” the regulator said in a statement.
“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.”
The regulator is seeking declarations that the bank “contravened s12CA, s12CB, s12DA, 12DB and s12DF of the Australian Securities and Investments Commission Act 2001 (Cth) (ASIC Act), s912A(1), s1041A, s1041B and s1041H of the Corporations Act 2001 (Cth)”.
“Further, ASIC has sought from the court pecuniary penalties against CBA and an order requiring CBA to implement a compliance program,” the regulator said.
The Commonwealth Bank has indicated it will fight the charges.
"Commonwealth Bank disputes the allegations made by ASIC. As this matter is before the courts, it is not appropriate to comment further at this time," said the bank in an official statement.