The corporate watchdog has announced it is commencing legal proceedings against Westpac Banking Corporation (ASX: WBC).
Despite the news, the Westpac share price appears to be unfazed – trading 0.77% higher to $26.18at the time of writing.
What are the allegations?
Allegations came to light this morning, following a media release from the Australian Securities and Investments Commission (ASIC). The corporate watchdog has advised it is commencing civil proceedings against Westpac for activities carried out in 2016.
The specific event in question relates to Westpac's role in executing a $12 billion interest rate swap transaction. This transaction was associated with AustralianSuper and IFM investors purchasing a 50.4% majority stake in Ausgrid from the NSW state government. Furthermore, an agreement for the acquisition was signed around 7 am on 20 October 2016.
ASIC alleges that by 8:30 am, Westpac knew it would be chosen by the consortium to carry out the transaction. The corporate watchdog states that this is the alleged inside information. Additionally, ASIC alleges "Westpac's traders acquired and disposed of interest rate derivative products in order to pre-position Westpac in anticipation of the execution of the swap transaction."
The swap was later executed between Westpac and the consortium at 10:27 am. ASIC alleges the pre-positioning "had the potential to impact the price of the swap transaction to the detriment of the Consortium or the special purpose vehicle."
What does ASIC want?
Based on the media release, the corporate watchdog will be seeking declarations and financial penalties for Westpac's alleged contraventions.
Another financial penalty wouldn't look great for the ASX-listed big four bank. Back in September last year, Westpac agreed to pay the largest fine in Australia corporate history — a $1.3 billion wrist-slapping for breaches of anti-money laundering and counter-terrorism financing.
Days after Westpac big profits announced to ASX
The revelation follows mere days after Westpac provided its half-year results to the ASX. For the six months ended 31 March, Westpac reported a statutory net profit after tax of $3,443 million. This was an increase of 189% over the prior corresponding period and 213% over the second half of FY 2020.
It was a positive day for the bank, leading to a 5% gain for the Westpac share price.
