Both ASIC and Westpac can claim a win in rate-rig case

All but four charges against Westpac were dismissed, but ASIC can claim a significant victory in a rare verdict.

Westpac CEO Brian Hartzer had insisted his traders had done nothing wrong. Pic: Hollie Adams

There’s enough in the judgment on the corporate regulator’s case against Westpac over rigging the benchmark interest rate for both sides to claim a win.

For Westpac, the central allegations that it engaged in market manipulation have been dismissed, as have charges of deceptive conduct. All but four of 48 charges were dismissed by Federal Court judge Jonathan Beach.

But the Australian Securities and Investments Commission can also claim a significant win because the court made findings of “unconscionable conduct” in four of sixteen instances it had alleged.

That is a higher order of offence than the “attempted” conduct for which ANZ and National Australia Bank settled a larger number of claims by ASIC.

Notwithstanding that most of the charges against Westpac were thrown out, the significance of the judgment is that it is a rare case of a court verdict on rate rigging anywhere in the world.

Everywhere else banks have settled without admissions of breaking the law, paid billions in fines and carried on.

The findings are also a long way from the standard marked out by Westpac chief executive Brian Hartzer, which may inform the decision about what is considered the unlikely possibility of an appeal.

“We don’t think we’ve done anything wrong, we don’t think any of our people have done anything wrong on the basis of the information that we’ve seen. We think ASIC’s got it wrong,” Mr Hartzer said two years ago.

He was determined not to throw his treasury team, including head trader Col “The Rat” Roden, under a bus by settling with admissions.

Justice Beach found Mr Roden’s evidence was “mostly reliable”.

The potential penalties are small — up to $1.1 million for three of the four offences — meaning Westpac could face a maximum fine of $3.3m. That is chicken feed both in absolute terms and relative to the $50m settlements for each of ANZ and NAB.

The banks may count themselves lucky that the case was brought under laws that have now been changed and are reckoned to make it easier to establish market manipulation.

The ruling also comes ahead of the government legislating new, bigger fines as part of its own belated efforts to get tough on white-collar crime.

But the finding that Westpac breached its licence is still a significant mark against Australia’s second biggest bank at a time when the new ASIC boss is talking tough about new penalties and more “dedicated, intensive” oversight of the financial services industry