Judge lam­basts ASIC

West­pac de­ci­sion due to­day

The Gold Coast Bulletin - - BUSINESS - JEFF WHALLEY

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.

West­pac’s fine for try­ing to rig a key in­ter­est rate is ex­pected to be handed down in the Supreme Court to­day.

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