In a statement from ASIC, in reasons for making the pecuniary penalty order, Justice Beach noted the legislative constraint he had in imposing the order,
‘If I had been permitted to do so I would have imposed a penalty of at least one order of magnitude above $3.3 million in order to discharge [the objectives of specific and general deterrence]. But I am not free do so.’
ASIC also noted that Justice Beach concluded in his reasons,
‘Westpac’s misconduct was serious and unacceptable…Westpac has not shown the contrition of the other banks. Moreover, imposing the maximum penalty is the only step available to me to achieve specific and general deterrence. The message that should be sent is that if you manipulate or attempt to manipulate key benchmark rates you are likely to have the maximum penalty imposed, whatever that is from time to time.’
Further, ASIC said the Court also ordered that an independent expert agreed between ASIC and Westpac be appointed to review whether Westpac’s current systems, policies and procedures are appropriate, and to report back to ASIC within 9 months, and that Westpac pay ASIC’s costs of and incidental to the penalty hearing as agreed and assessed.
“Today’s court orders follow Justice Beach’s judgment, delivered on 24 May 2018, which found that Westpac on 4 dates in 2010 traded with a dominant purpose of influencing yields of traded Prime Bank Bills and where BBSW set in a way that was favourable to its rate set exposure. His Honour held that this was unconscionable conduct in contravention of s12CC of the ASIC Act,” ASIC said.
“His Honour also found in his 24 May 2018 judgment that Westpac had inadequate procedures and training and contravened its financial services licensee obligations under s912A(1)(a), (c), (ca) and (f) of the Corporations Act 2001 (Cth).”
ASIC Commissioner Cathie Armour welcomed the decision, noting that ASIC brought this litigation to hold the major banks to account for their unacceptable conduct, and to test the scope of the law in combating benchmark manipulation.
“ASIC actions have led to these successful court outcomes, and also contributed to new benchmark manipulation offences being enacted by Parliament, and the calculation method and administration of the BBSW being radically overhauled,” Ms Armour said.
