By Byron Kaye
SYDNEY (Reuters) – The Australian business watchdog accused Westpac Banking Corp of insider trading while funding an A $ 16 billion ($ 12 billion) power grid privatization in 2016, the latest in a series of regulatory issues for the country’s second-largest lender.
The Australian Securities and Investments Commission (ASIC) said Westpac knew it had won the contract to help two pension funds buy Ausgrid, a state-owned electricity supplier from millions of people around. of Sydney, for two hours, while buying A $ 12 billion in derivatives. to support the agreement.
“Ausgrid’s information was generally not available and it was information which, if it were generally available, a reasonable person would expect to have a material effect on the price or value of the products being traded,” ASIC said in a civil action filed Wednesday.
The lawsuit casts a new cloud on Westpac a day after it posted a tripling in first half profit largely due to penalties it paid in the previous period to settle an unrelated lawsuit with an agency independent regulator accusing him of allowing millions of offshore payments, including to child providers. operating equipment.
It also underlines the heightened determination of Australia’s financial regulators to take on big business after being accused in a 2018 public inquiry of being too close to the industry.
“With all that Westpac has been through over the past few years, and they have dramatically increased regulatory compliance spending, there is a lower likelihood of that happening in the future,” said Nathan Zaia, banking analyst at Morningstar.
“If ASIC wins the lawsuit, it will incur a penalty. How big of that will be anyone’s guess.”
Seven employees and former employees of Westpac were named in the ASIC lawsuit but do not face jail time as this is a civil case only.
A Westpac spokesperson declined to comment beyond a statement from the company that the bank considered its position and took the allegations “very seriously.”
Westpac shares initially traded higher on Wednesday as analysts revalued their forecasts following yesterday’s result, but the stock gave up most of its gains to remain stable by mid-afternoon , just behind the market as a whole.
The two pension funds that Westpac helped buy Ausgrid for a total of A $ 16 billion, AustralianSuper and IFM, declined to comment.
A representative for New South Wales State Premier Gladys Berejiklian, who was state treasurer at the time of the privatization deal in 2016, also declined to comment.
In a previous ASIC action, a court ordered Westpac to pay A $ 3.3 million in 2018 for its involvement in the fraudulent fixing of interbank lending rates in 2010.
(1 USD = 1.2928 Australian dollar)
(Reporting by Byron Kaye and Paulina Duran in Sydney and Nikhil Kurian Nainan in Bengaluru; Editing by Rashmi Aich and Lincoln Feast.)