CBA faces court for market manipulation

In a statement, the corporate regulator alleged that the Commonwealth Bank had engaged in “unconscionable conduct” to affect the bank bill swap reference rate (BBSW), which is the primary interest rate benchmark used in Australia.

ASIC has already commenced proceedings against ANZ, NAB and Westpac, with the former two reaching a settlement, while Westpac’s case is still being seen.

The regulator alleges that the Commonwealth Bank’s actions, which occurred between January and October 2012, were intended 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.