Three Aussie banks face US class action

Josh Kim

August 19, 2016

http://myhealthbowl.com/2016/08/19/three-aussie-banks-face-us-class-action.html

Australia's big four banks and Macquarie Group Ltd (ASX: MQG) could be forced to pay out billions over their alleged manipulation of the Australian bank bill swap rate (BBSW).

The suit is led by Sonterra Capital Master Fund, FrontPoint Financial Services Fund LP and trader Richard Dennis, and alleges that the plaintiffs manipulated money-market transactions during the fixing window for the bank-bill swap rate, made false rate submissions, bought or sold money-market instruments at a loss to create artificial derivatives prices, and shared proprietary information on derivatives based on the bank-bill swap rate.

The suit-filed on behalf of anyone who engaged in USA -based transactions priced, benchmarked or settled based on the bank-bill swap rate from at least January 2003-demands a jury trial and is seeking injunctions against the defendants and damages for the alleged violations.

This is not the first time though these two funds have sued over rigging claims.  Before late September 2013, the Australian benchmark was based on submissions from up to 14 local and overseas banks.

ANZ, Westpac, National Australia Bank and Macquarie Group are among several global banks that have this week been hit with legal action over allegations that traders at the banks rigged the bank bill swap rate (BBSW).

The BBSW is used to price many securities as well...Labor Senator Sam Dastyari jumped on the class action, saying it refutes the banks' claims that their conduct did not cause damage to investors.

The four banks all made statements to the ASX, with the ANZ telling the exchange that it will "be vigorously defending the U.S. class action complaint".

NAB reiterated that it did not agree with claims by the Australian securities regulator.

"Westpac denies the allegations in this claim and, if served with the claim, will defend those allegations vigorously". Commonwealth Bank of Australia, the nation's second largest lender, was not immediately available to comment.

ANZ, NAB and Westpac have all rejected ASIC's claims of manipulation of bank bill swap rap. Legal action has not been brought against the CBA or Macquarie.

The Commonwealth Bank is also expected to be included in ASIC's case.

Australia's leading banks may have landed themselves in hot water and could stand to lose billions after becoming embroiled in an worldwide lawsuit launched by two USA hedge funds and a derivative trader in connection with alleged rate rigging, according to The Sydney Morning Herald today. Their "ultimate goal was to increase the profitability of their BBSW-based derivatives positons [sic]", the claim says.

"ASIC's ongoing investigation has already uncovered communications in which [the] defendants openly conspire to fix BBSW and the prices of BBSW-based derivatives". Worldwide broking houses ICAP and Tullett Prebon are also named. Worldwide broking houses ICAP and Tullett Prebon are also named, as is NAB's New Zealand subsidiary, Bank of New Zealand.