CBA, ANZ to Settle 2016 Lawsuit Involving BBSW Manipulation
Editors, Regulation Asia, 23 March 2021
The case was initially launched by two US hedge funds and a US-based derivatives trader, alleging they suffered losses due to bank manipulation of the BBSW.
CBA (Commonwealth Bank of Australia) and ANZ Bank have separately issued statements saying they have reached an agreement to settle a class action brought against them in the US in 2016 involving the trading of certain BBSW-based products.
Both banks said the terms of the settlement are currently confidential, but that it does not require any admission of liability, and that it is subject to the negotiation and execution of complete settlement terms as well as court approval.
Both banks also said the financial impact of the settlement is “not material”, though CBA said it had raised a provision in relation to the class action in its 2021 financial year.
According to the Australian Financial Review, the case involves legal action launched by two US hedge funds – Sonterra Capital Master Fund and Frontpoint Financial Services – and a US-based derivatives trader – Richard Dennis – in August 2016.
The plaintiffs had alleged that they suffered losses trading derivatives contracts linked to the BBSW as a result of manipulation by the big four Australian banks, Macquarie, two brokers and various international banks – all members of a panel that set the BBSW.
The banks “generated hundreds of millions of dollars in illicit profits by artificially fixing BBSW-based derivatives prices at levels that benefited their trading books,” the claim said.
According to the AFR report, Westpac said last October it had settled the action, the claims against NAB were dismissed in February 2020, and Macquarie successfully applied to the court to be excluded from the case in March 2019.
The US class action came after ASIC (Australian Securities and Investments Commission) sued Westpac, NAB and ANZ in 2016 for alleged market manipulation and unconscionable conduct, accusing the banks of rigging the BBSW to inflate their profits from 2010 to 2012. CBA was later included in the ASIC action.
