ASIC appoints external lawyers for bank fight
The Australian 12:00am May 16, 2017
Richard Gluyas
The pre-trial manoeuvring ahead of D-Day in ASIC’s market manipulation case against three of the four major banks has just got a little more intriguing, after the watchdog’s appointment of an external law firm.
Johnson Winter & Slattery has taken up the cudgels on behalf of the regulator.
The appointment will trigger an inevitable round of speculation about whether it tips the balance in favour of all-out war, or makes Greg Medcraft more inclined to negotiate a truce.
This column has previously held the view that litigation is more likely, mainly because Medcraft’s stated terms, which include an admission of liability, are untenable for the banks.
The banks believe that admissions will trigger an avalanche of class actions, much like the case already launched in the US by two hedge funds and the wealthy commodities trader Richard “The Prince of the Pit” Dennis over the same alleged misconduct.
The potential risk outweighs any reward from getting Medcraft off their backs.
However, as the October 23 trial date looms ahead of Medcraft’s November 12 retirement, now is the time to start seriously considering options to avoid a $200 million series of mega-trials, assuming Commonwealth Bank escapes the net.
It’s unlikely that Johnson Winter & Slattery’s arrival on the scene will itself be the catalyst for a settlement; more that there’s an unusual alignment of events, with a trial scheduled to start soon and Medcraft to retire only 20 days later.
Therein lies an opportunity, and both sides will be aware of it.
Unsurprisingly, the banks tried but ultimately failed in a bid to exploit any uncertainty created by ASIC’s succession drama.
They pitched Federal Court judge Jonathan Beach late last month to delay the September 23 trial date for months, arguing that ASIC had repeatedly failed to meet court deadlines for sharing evidence to support its case.
As a result, they said, the conduct of the trial had changed radically.
Justice Beach spent the day hosing them down before finally agreeing to a one-month delay.
So it’s game on. Again.