ASIC scolded in Westpac swap rate case

Westpac tomorrow learns its penalty for unconscionable conduct, but today the regulator also came under a judge’s glare.

A hearing is deciding what penalty Westpac should receive for unconscionable conduct. Pic: Hollie Adams

A Federal Court judge will rule tomorrow on what penalty Westpac should face for unconscionable conduct, after scolding ASIC for “re-encapsulating” its case against the bank.

The bank (WBC) today faced a penalty hearing in Melbourne over the court’s finding in May that it had engaged in unconscionable conduct over the bank bill swap rate.

But the Australian Securities Investments Commission also came under the glare of Judge Jonathan Beach, who accused it of reframing its case to try to inflate the bank’s penalty from $3.3 million to $59m.

Counsel for ASIC, Philip Crutchfield QC, has been arguing that Westpac should be penalised for each unconscionable trade in the bank bill swap market, instead of each transgression.

Justice Beach said the case was pleaded on the basis of Westpac’s unconscionable trading, not the number of unconscionable trades.

The judge warned ASIC of its obligation to be a model litigant.

The Federal Court in May found Westpac had engaged in unsconcionable conduct on four occasions in 2010, in relation to the bank bill swap rate, a key benchmark rate.

However, it dismissed ASIC’s allegations that Westpac had engaged in market manipulation, and misleading conduct, on 16 occasions.

Westpac was the only big bank to challenge ASIC’s rate-rigging claims in court.

ANZ, National Australia Bank and Commonwealth Bank settled similar matters for a combined total of $125 million.