NAB faces market manipulations charges
The Australian Securities and Investments Commission (ASIC) has commenced legal proceedings against National Australia Bank (NAB) in the Federal Court of Melbourne for market manipulation in relation to its involvement in setting the bank bill swap reference rate (BBSW) between 2010 and 2012.
According to ASIC, it was alleged that NAB traded in a manner that was "unconscionable" and intended to create "an artificial price for bank bills" on 50 occasions between June 8, 2010 and December 24, 2012.
Although the Australian Financial Markets Association (AFMA) had changed the method by which BBSW, the primary interest rate benchmark used in Australian financial markets, was now calculated, the conduct that the proceedings related to occurred before this change in methodology.
At that time, NAB allegedly held a number of products, which were priced or valued off BBSW and traded in the bank bill market with the intention of moving the BBSW higher or lower, maximising NAB's profit or minimising its loss to the detriment of those holding opposite positions to NAB's.
ASIC was also seeking monetary penalties against NAB and an order requiring the bank to implement a compliance programme.
According to NAB's chief risk officer, David Gall, NAB fully co-operated with ASIC and "took these allegations seriously".
"We do not agree with ASIC's claims which means they will now be settled by a court process," he said.
He added that, as part of ASIC's investigation, NAB had provided emails, chat messages and telephone conversations involving its employees.
Earlier this year, ASIC also commenced legal proceedings in the Federal Court against ANZ and Westpac after conducting investigations into misconduct in relation to the BBSW.
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