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Australia and New Zealand Bank (ASX:ANZ) to face criminal cartel charges

As if some of the explosive allegations being made against the banks at the Royal Commission were not enough, it’s now been announced that Australia & New Zealand Banking Group (ASX: ANZ) is expected to have criminal charges brought against it by the Commonwealth Director of Public Prosecutions (CDPP).

According to an ACCC media release criminal charges will be filed against ANZ Bank, its group treasurer Rick Moscati, two other companies and a number of individuals.

It being widely reported that Deutsche Bank and Citigroup are the two other companies set to face charges for allegedly seeking to fix the price at which they sold ANZ shares they had leftover after acting as underwriters for ANZ Bank in a 2015 capital raising.

According to reports in the AFR, the underwriters were left with around $789.2 million worth of shares not taken up in the capital raising which they allegedly then planned to sell on market in a cartel (price-fixing) like manner.

The fact that criminal rather than civil charges have been filed will send shockwaves through the local investment banking community as it means the possibility of jail time for those convicted, rather than the usual slap on the wrists and drop-in-the-ocean fines under civil charges.

In commonwealth countries it’s the Director of Public Prosecution’s responsibility to bring criminal charges where it’s assessed there is a reasonable prospect of conviction and there’s likely to be an air of panic engulfing the meeting rooms at ANZ, Deutsche Bank and Cititgroup today.

ANZ Bank has previously sacked senior traders for “misconduct” around allegations of a party culture, while it also agreed to pay $50 million in penalties over its role in artificially manipulating the benchmark inter-bank lending rate BBSW.

It seems then that some at ANZ Bank saw the Wolf of Wall Street movie as more behavioural handbook than cautionary tale, with criminal charges being filed around its biggest capital raising in recent history heaping more egg on its face.

“We believe ANZ acted in accordance with the law in relation to the placement and on that basis the bank intends to defend both the company and our employee”, the bank responded last Friday and for now the allegations remain unproven.

However, they are likely to prove a big distraction for a management team already spending time on the Royal Commission and other regulatory inquisitions.

Investors appear to have shrugged off the problems today, with the stock 0.4% lower in lunchtime trade.

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Motley Fool contributor Tom Richardson has no position in any of the stocks mentioned.

You can find Tom on Twitter @tommyr345

The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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