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ASIC joins ACCC in pursing ANZ over $2.5b share placement

ABC News logo ABC News 14/09/2018 Stephen Letts

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ANZ's battle to defend a $2.5 billion capital raising is now raging on another front, with corporate watchdog ASIC confirming it will take action against the bank.

ASIC's decision to pursue ANZ over allegations it failed to comply with its continuous disclosure obligations to the ASX follows action from the competition watchdog, the ACCC, earlier this year.

The ACCC has laid criminal cartel charges against ANZ and two investment banks over the sale of $2.5 billion worth of shares to big institutional investors in 2015.

ASIC will allege that the market should have been told that the joint managers of the share sale — Citigroup and Deutsche Bank — took up a $790 million shortfall in unsold shares.

ANZ said it will defend both sets of allegations.

"The shares in question represented less than 1 per cent of the shares on issue at the time, and were taken up by the joint lead managers in circumstances where the book indicated the placement was covered at 103 per cent, " ANZ said in a statement.

"ANZ is not aware of a precedent for a listed entity to disclose the take-up of shares by underwriters in an equity placement," the statement said.

"ANZ's disclosure in relation to the placement was in accordance with its ASX disclosure obligations, as well as market practice, and we are defending the matter," ANZ chief risk officer Kevin Corbally said.

ANZ bank signage. © AAP Image/Joel Carrett ANZ bank signage. Two-year investigation could lead to criminal charges

The ACCC and ASIC have been investigating ANZ's controversial capital raising for more than two years.

The crux of the issue is whether the market was properly informed that almost a third of the shares, in what was one of the biggest capital raisings in Australian banking history, initially were not sold and remained in the hands of two of the deal's underwriters.

A third investment bank involved in the deal, JP Morgan, has not been charged and is understood to be assisting the regulators with their inquiries.

While ASIC's action will be pursuing civil penalties, the ACCC case is far more serious, involving allegations of criminal breaches of the law.

The ACCC charges involve some of the biggest names in Australian investment banking, including Citigroup's former country head for Australia, Stephen Roberts, Citigroup's current managing director, John McLean, and global head of foreign exchange trading Itay Tuchman.

Deutsche Bank's former Australian chief executive Michael Ormaechea and Michael Richardson, who has also left the bank, have also been charged, along with ANZ's global head of treasury Rick Moscati.

Under the Competition and Consumer Act, individuals found guilty face up to 10 years in jail and/or fines of up to $420,000 per criminal cartel offence.

Institutions face fines of up to $10 million per offence.

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