Judge lambasts ASIC
Westpac decision due today
A FEDERAL Court judge has criticised the corporate watchdog for using “artificial” arguments in an attempt to hike Westpac’s fine for trying to rig a key interest rate.
Justice Jonathan Beach yesterday took aim at the Australian Securities and Investments Commission for trying to “reconstruct” the case to argue for a bigger penalty.
Justice Beach in May had found Westpac engaged in unconscionable conduct in attempts to manipulate the bank bill swap rate – an interbank lending rate that influences interest rates paid by consumers and businesses.
Yesterday, he presided over a hearing in Melbourne to decide what penalty Westpac should face.
Lawyers for ASIC argued the maximum fine should be raised from $3.3 million to $64 million.
Industry commentators say it may reflect an attempt by new ASIC chair James Shipton to beef-up the penalties bid institutions pay when they break the law.
Amid the banking royal commission this year, regulators have come under fire for a light-touch approach to finance companies.
While Westpac was not found guilty of manipulating the bank bill swap rate, it was found to have traded with an intention of influencing the yields on three different dates. ASIC had sued the other major banks, who all reached settlements with the regulator.
ANZ and National Australia Bank paid about $50 million each and the Commonwealth Bank paid $25 million. Westpac was the only lender to fight the claims in court.
Justice Beach said ASIC had no material in its closing submissions “that go anywhere close to” supporting its argument for higher penalties. Philip Crutchfield QC, counsel for ASIC, argued that the case reflected that Westpac should be fined $1.1 million dollars for each of 58 trades that happened during the three days of trading in question.
“I think what you’re saying is wholly artificial, Mr Crutchfield, to be frank,” Justice Beach said.
“You never ran such a case.”
He is due to hand down his decision at 2.15pm today.