Australia's corporate watchdog detailed more than 80 instances where Commonwealth Bank of Australia employees colluded on their daily plans regarding the benchmark interest rate to the benefit of the bank, The Australian Financial Review reported March 5.
The Australian Securities and Investments Commission, or ASIC, said in its filing with the Federal Court that bank staff frequently shared their trading session plans for the benchmark bank bill swap rate, or BBSW. In one instance, the bank's head of swaps, Peter Psihoyos, told Mark Hulme of the bank's treasury department and swaps dealer Grant Barnes that it would be in the bank's best interest if Hulme and Barnes did not buy three-month bills on a certain date.
The bank is expected to argue that its employees did not engage in unlawful conduct and that the sharing of information was part of its strategy to manage interest rate risk.
ASIC filed legal proceedings against CBA in January for allegedly rigging the BBSW. The regulator had claimed that all four of the major banks had tried to influence the BBSW, though Australia & New Zealand Banking Group Ltd. and National Australia Bank Ltd. have settled with the regulator. Westpac Banking Corp. denies the allegations.
The regulator claims that CBA did not establish or maintain policies to protect the integrity of the setting of the BBSW rate or monitor the activities of staff who traded bank bills or made submissions to the BBSW benchmark operator. ASIC also alleges that the bank had a practice of trading bills to ensure that the BBSW has maintained in a way that was favorable to the bank and that this practice was known to senior management.
