ASIC takes major bank to Federal Court

by Julia Corderoy08 Jun 2016
Corporate watchdog ASIC has commended civil penalty proceedings against NAB for its role in manipulating interest rates.

The legal proceedings against the major bank commenced in the Federal Court in Melbourne this week, with NAB to defend against charges of unconscionable conduct and market manipulation in relation to its involvement in setting the bank bill swap reference rate (BBSW) in the period 8 June 2010 to 24 December 2012.

The BBSW is the primary interest rate benchmark used in Australian financial markets, administered by the Australian Financial Markets Association (AFMA). It is alleged that NAB traded in a manner that was unconscionable and intended to create an artificial price for bank bills on 50 occasions during the period of 8 June 2010 and 24 December 2012.

On 27 September 2013, AFMA changed the method by which the BBSW is calculated.

ASIC alleges that NAB had a large number of products which were priced or valued off BBSW and that it traded in the bank bill market with the intention of moving the BBSW higher or lower. 

ASIC also alleges that NAB was seeking to maximise its profit or minimise its loss to the detriment of those holding opposite positions to NAB's.

The watchdog has sought from the court pecuniary penalties against NAB and an order requiring NAB to implement a compliance program.