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Australian court clears Westpac of most benchmark rate-rigging allegations

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Australian court clears Westpac of most benchmark rate-rigging allegations

The Federal Court of Australia ruled mostly in favor of Westpac Banking Corp. in a rate-rigging case filed by the securities regulator, but noted that the bank in certain occasions engaged in "unconscionable conduct" to influence the Bank Bill Swap Rate.

The court concluded that the Australian Securities and Investments Commission failed to support its case against Westpac for allegedly manipulating the benchmark rate between April 2010 and June 2012. In addition, no policy was in place during the period that addressed Westpac's trading in the bank bill market or in the setting of BBSW.

The court cleared the bank in 12 out of the 16 specific occasions mentioned by ASIC. However, it found that employees of the bank on four occasions traded with the dominant purpose of influencing yields during the relevant period. It also said Westpac failed in its supervisory duty in ensuring that its representatives and traders did not engage in rate manipulation.

Further, many of the steps the bank took following the incident should have been in place before hand.

Westpac acknowledged the ruling and said it will work with regulators to resolve the issue.

The court said it will give ASIC and Westpac an opportunity to consider the ruling and to submit proposed orders for the penalty.