Legal action over ANZ share sale

THE corporate watchdog has launched legal action against ANZ over an alleged failure to tell the market about a significant shortfall in demand during a capital raising program.

ANZ yesterday said the Australian Securities and Investments Commission had commenced civil proceedings over its $2.5 billion sale of new shares to institutional investors in 2015.

ASIC, led by chairman James Shipton, alleges ANZ should have advised the market that investment banks un- derwriting the sale had to take up nearly a third of the shares in the placement.

The case is also the subject of separate criminal cartel legal action involving the local arms of some of the world’s biggest investment banks.

ANZ said it would defend ASIC’s allegations and it was not aware of a precedent for a listed entity to disclose the take up of shares by underwriters in an equity placement.

“ANZ’s disclosure in relation to the placement was in accordance with its ASX disclosure obligations as well as market practice,” ANZ chief risk officer Kevin Corbally said.

In June, the Australian Competition and Consumer Commission charged Citigroup, Deutsche Bank and ANZ with acting as a cartel when they faced a shortfall in demand for ANZ’s $2.5 billion share placement to big fund managers in August 2015.

ASIC alleges ANZ should have told the market the joint lead managers took up about 25.5 million shares of the placement.

While Citigroup, Deutsche and JPMorgan acted as jointlead managers on the capital raising program, JPMorgan is believed to have been granted immunity from the ACCC’s legal action for its co-operation in the investigation.

Individuals also have been charged, including Bank of America Merrill Lynch head of capital markets Michael Richardson, ANZ’s chief risk officer for the Australian division Rick Moscati and former Deutsche Bank chief executive Michael Ormaechea.

The cartel allegations relate to how the banks then attempted to offload the unsold shares, worth about $800 million, to investors.