AUS
NZ
UK
CA
USA
IND
Summary
- The three banks and six of their executives are facing criminal charges after the Australian Competition and Consumer Commission carried out an investigation into criminal cartel charges
- The case, which was first brought to light in 2018, will now proceed to the Federal Court
- The allegations are related to the ANZ issuing a A$2.5 billion share placement in 2015
The three major banks, Australia and New Zealand (ANZ) Banking Group Ltd, Citigroup Inc, Deutsche Bank AG, and six of firms’ former staff were asked to face trial in Australia’s NSW Local Court on Tuesday after pleading not guilty to colluding during a share issue.
The six employees include Itay Tuchman and John Mclean, who were executives of Citi, Stephen Roberts, the former head of Citi in Australia, Michael Ormaechea, the former head of Deutsche Bank in Australia, Michael Richardson, former executive of Deutsche Bank, and Rick Moscati, the former treasurer of ANZ.
The Australian Competition and Consumer Commission (ACCC) has charged the financial companies and their clients, and their former executives in the biggest white collar criminal case in Australia, accusing them of conspiring to withhold unsold shares to stop the price of the stock from falling. The investment banks have been accused of colluding over a A$2.5 billion ($1.8 billion) in the share issue of 2015.
The executives have denied the charges and have been defending the proceedings since the last two years.
The case
In order to strengthen the balance sheet of ANZ in accordance with demands from the banking regulatory body Australian Prudential Regulation Authority, Citigroup, Deutsche Bank, and JP Morgan had organised and underwritten the sale. The underwriters had agreed to buy any shares which were refused by investors in the share placements.
Generally, there are no shares left. But in this placement, almost one-third of the shares, which were worth $790 million, were left unsold. The banks were, thus, forced to take up more than ANZ's unsold 25 million shares to sell them in future.
So, the investment banks were left with those unsold ANZ’s shares, which were needed to be eventually offloaded.
JPMorgan has already been granted immunity and therefore, it is not facing any charges.
Since 2018, the matter has seen several trials in Sydney’s local court. The next trial is set to take place in the Federal Court, and it will relate to criminal breaches of the Australian consumer law. The next trial date is not yet fixed.
Penalty
As per the norms, each criminal cartel charge could lead to a fine of up to A$10 million or thrice the amount the company has benefited from the actions, whichever of the two is greater. However, individuals could be fined a sum of up to A$420,000 or could face imprisonment for over 10 years or both.
ACCC chairman Rod Sims refused to comment on the issue. Citigroup has denied charges, the Deutsche Bank has said that it would be defending the charges.
