ASIC lands blow on Westpac in rate-rigging case

The corporate regulator yesterday won a battle in its rate-rigging war against Westpac.

ASIC accuses Westpac of ­market manipulation

The corporate regulator yesterday won a battle in its rate-rigging war against Westpac after a judge ­allowed it to file new paperwork broadening its case against the bank.

Federal Court judge Jonathan Beach said the Australian Securities & Investments Commission had made a mistake in its pleadings that might be read to limit parts of its case that Westpac rigged or tried to rig the benchmark bank bill swap rate to 16 ­specific dates. ASIC has maintained it always intended to allege that Westpac engaged in a pattern of rate-setting conduct throughout the period from April 6, 2010 to June 6, 2012.

ASIC accuses Westpac of ­market manipulation — carrying out transactions that either actually create an artificial price or are likely to do so — and creating a false or misleading appearance of trading.

It also accuses the bank of unconscionable conduct, including by not telling people who borrowed money at rates set relative to the BBSW that the rate was rigged. And it alleges Westpac ­failed to provide financial services efficiently, honestly and fairly, in part by concentrating the power to buy and sell issues in the hands of its then top trader, Col “The Rat” Roden.

Counsel for Westpac, Matthew Darke, said the bank did not agree the changes called for were clarifications, calling them a significant change to the case.

He criticised the regulator for asking for the changes late in the case, while the matter was on trial.

But judge Jonathan Beach said ASIC had simply made a drafting error. “In my view it is appropriate to give ASIC an opportunity to correct this issue,” Justice Beach said.

He added that Westpac had failed to establish it would suffer any forensic disadvantage if ASIC was allowed to amend its case.

There would be greater prejudice to the public interest if he refused ASIC’s application than there would be prejudice to Westpac by allowing it, he said.

And he blasted Westpac for ­filing an affidavit in support of its position this morning when it could have been filed on Friday.

“Why is this so late and so nebulous?” he asked Mr Darke.

Mr Darke said the affidavit was done “reasonably promptly”, prompting an incredulous ­response — “Really?” — from the judge.

Mr Darke said Westpac faced serious consequences at the hands of the state if it lost the case. This is because ASIC is seeking civil ­penalties — similar to fines — from the bank if it wins.

Justice Beach questioned whether there was any prejudice to Westpac by allowing ASIC’s amendments. “The question for you is: what real forensic change in the landscape has occurred?” he asked Mr Darke.

“You always had to meet a case of the practice throughout the ­period.”

He said that if Westpac needed additional evidence there was “plenty of time” to get it from ­either new witnesses or the bank’s existing witnesses, treasurer Curt Zuber, Mr Roden and his offsider Sophie “The Perfumed Steamroller” Johnston, who are due to give evidence next week.