ANZ push at ASIC attack defeated as $754m shortfall case kicks into gear

A court has left the door open to ASIC to argue its case against ANZ, claiming the bank should have revealed the size of a $754m shortfall in a $2.5bn institutional placement in 2015.

MELBOURNE, AUSTRALIA – NewsWire Photos FEBRUARY 5, 2021: An ANZ bank in Melbourne CBD. Picture: NCA NewsWire / David Geraghty

ANZ has been knocked back after attempting to split a key argument in the corporate regulator’s case against it, over alleged breaches of continuous disclosure rules after a $754m shortfall in a massive institutional placement in 2015

In its second day of hearings on Wednesday, ANZ sought to rubbish arguments put by the Australian Securities and Investments Commission in the long-running case.

ANZ’s lawyers had sought to knock out a key part of ASIC’s case claiming its arguments presented in court, that investors could be influenced both by the size of the underwriter acquisition as well as expectation that underwriters “would promptly dispose of the acquired Placement Shares and place downward pressure upon the ANZ share price”, were incompatible.

The regulator had sought to argue ANZ had improperly disclosed the failure of a massive market placement in early August 2015. Justice Mark Moshinsky said the current wording left it open to ASIC to rely “on one or more of the reasons” and there would be no prejudice if the regulator relied on it “as a stand-alone reason”.

John Sheahan, appearing for ANZ, said ASIC was seeking to bring a “completely novel case”, as the regulator was seeking to punish the bank for failing to reveal the shortfall to the market.

“ASIC does not point to any precedent for disclosure happening.” he said.

“In the case of an underwriting, whether it has a shortfall, there was no suggestion any of the material that there was some not even market practice.”

ASIC has alleged ANZ failed to disclose the institutional placement shortfall or the fact that underwriters had scooped up a large tranche of shares.

It has alleged ANZ should have been able to inform investors of the shortfall “by around 8.35pm, or alternatively prior to commencement of trading on 7 August 2015” but failed to do so.

“ANZ has no compelling defence in fact or law. Accordingly, ASIC submits that the court must find ANZ to be in contravention of its disclosure obligations,” ASIC claims.

The court has heard ANZ was initially bullish in the placement, which had sought to raise $3bn to fund the bank’s capital requirements, with a draft media release circulated among senior leadership that branded it successful and heralding it as “significantly oversubscribed, attracting support from a wide range of institutional investors”.

But after early bids came in, ANZ treasurer Rick Moscati “reflected that the placement was not going to plan for ANZ”, according to ASIC.

This saw ANZ facing a $754.9m shortfall in the bank‘s proposed $3bn share placement, before this worsened to $790m allocated to underwriters.

In its submissions, ANZ claims ASIC’s case is flawed, noting the information identified “was not material”.

The case, set to run for two more weeks, will see several current and former ANZ executives close to the deal called to give evidence.