Westpac has been slapped with legal action from the corporate watchdog for alleged insider trading.
The Australian Securities and Investments Commission (ASIC) has lodged proceedings in the Federal Court against the major bank for financial crimes dating back to 2016.
ASIC alleges Westpac conducted insider trading and unconscionable conduct that breached its obligations under its financial services licence.
The accusations relate to a $12bn interest rate swap transaction with AustralianSuper and a consortium of other companies for the majority stake in Ausgrid following the energy provider’s privatisation by the NSW government.
ASIC believes Westpac knew before the rest of the market that it would be executing the transaction, which is illegal.
“ASIC alleges that by about 8.30am on 20 October 2016, Westpac knew, or believed, it would be selected by the consortium to execute the interest rate swap transaction on that morning,” he said.
“ASIC alleges this was inside information.”
The corporate watchdog said Westpac traders were in possession of inside information before the market opened at 8.30am and used the information to place the bank in a better position before the transaction took place.
“ASIC alleges that Westpac’s trading occurred while it was in possession of information that was not generally available to other market participants, including those that traded with Westpac that morning,” the regulator said.
“Prohibitions against insider trading are a fundamental tenet of market integrity.”
Westpac has acknowledged the civil proceedings and said it was considering its position on the ASIC allegations.
“The allegations relate to interest rate hedging activity undertaken during the course of Westpac’s involvement in the 2016 Ausgrid privatisation transaction,” a Westpac spokesman said.
“Westpac takes these allegations very seriously and is considering its position.”