ANZ's widespread misconduct fine increased to $250m by Federal Court
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The news: The Federal Court has ordered ANZ to pay $250 million in penalties for widespread misconduct and systemic risk failures, an increase from the $240 million sought by the bank and the corporate regulator in September.
The numbers: The increase in the overall amount was due to Federal Court Justice Jonathan Beach increasing one of the penalties to $50 million, from $40 million previously, for inaccurate reporting of secondary bond market turnover data to the Australian Government.
The increase in the penalty was a result of the court finding that ANZ’s conduct was “inexcusable” and had “no redeeming feature whatsoever” and that a “very substantial penalty needs to be imposed to achieve both specific deterrence and general deterrence.”
“Accurate information is the life-blood of the AOFM [Australian Office of Financial Management] in its assessment of the activities in the relevant markets and the position of the participants,” Beach said.
Beach ordered ANZ to pay:
- $135 million in combined penalties for institutional and markets misconduct relating to the management of a $14 billion government bond deal and inaccurate bond data. This includes a record $80 million penalty for unconscionable conduct;
- $40 million for failing to respond to hundreds of customer hardship notices, in some cases for more than two years, and failing to have proper hardship processes in place;
- $40 million for making false and misleading statements about savings interest rates, and failing to pay the promised interest rate to tens of thousands of customers; and
- $35 million for failing to refund fees charged to thousands of dead customers and not responding to loved ones trying to deal with deceased estates inside the required timeframe.
What they said: On the inaccurate reporting on secondary bond market turnover, Beach said ANZ did not act conscionably, did not act transparently, nor did it trade in the way in which it said it would.
“It conducted its hedging in a manner which caused undue pricing pressure on the reference price product at the time of pricing,” Beach said.
“ANZ’s behaviour was particularly serious when coupled with ANZ’s inaccurate and incomplete statements to the AOFM in relation to the manner of its trading and behaviour as a duration manager, when post-completion of the issuance the AOFM expressed concern about the price at which the bond issuance had priced.
"ANZ’s post-completion conduct reveals a lack of candour and frankness about its trading.”
The Australian Securities and Investments Commission (ASIC) chair Joe Longo said: “In the bond trading and misreporting matter, ANZ exposed the Australian Government to a significant risk of harm, denied the Government an opportunity to protect itself and the public interest, and mislead the government for nearly two years by overstating bond trading volumes by billions of dollars.
“ASIC estimates ANZ’s trading misconduct cost up to $26 million, reducing funds that could have supported essential public services.”
The source: ASIC
