Criminal charges relating to an alleged cartel by Citigroup, Deutsche Bank and the ANZ have been formally laid. Senior executives at all three, including two former CEOs, also face criminal charges.
Competition watchdog the ACCC says charges involve alleged cartel arrangements relating to trading in ANZ shares following a $2.5 billion institutional share placement in August 2015.
Citigroup Global Markets Australia, Deutsche Bank and the ANZ Bank have been formally charged with criminal cartel offences following an investigation by competition watchdog the ACCC.
The individuals charged are Citigroup’s John McLean (Head of Capital Markets Origination, Australia/New Zealand), Itay Tuchman (now Citi’s London-based Head of Foreign Exchange Trading) and Stephen Roberts (chair and former CEO, who retired two years ago);
Deutsche Bank executives Michael Ormaechea (a former CEO) and Michael Richardson; and Rick Moscati, the ANZ’s Group Treasurer.
Ormaechea retired from Deutsche last year after 22 years with the bank. Before he left, he had dual roles as head of global markets in Asia Pacific, and chief country officer for Australia.
The charges involve alleged cartel arrangements relating to trading in ANZ shares held by Deutsche Bank and Citigroup. ANZ and each of the individuals are alleged to have been knowingly concerned in some or all of the alleged conduct.
It emerged last Friday that the charges were pending but the seniority of the executives named on Tuesday is a stunning development.
The cartel conduct is alleged to have taken place following a $2.5 billion ANZ institutional share placement in August 2015.
“These serious charges are the result of an ACCC investigation that has been running for more than two years,” says ACCC Chairman Rod Sims.
“Charges have now been laid by the Commonwealth Director of Public Prosecutions and the matter will be determined by the Court.”
The matter is listed before the Downing Centre Local Court in Sydney on July 3.
The case centres on ANZ’s Institutional Equity Placement of 80.8 million shares at $30.95 each in August 2015 and the lack of disclosure that 25.5 million of these went to two of the three joint lead managers.
Around 30% of the shares – some 25.5 million worth $789.2 million – were unallocated during the raise.
ANZ, Deutsche Bank and Citigroup intend to defend the charges. JPMorgan, the other lead manager, is reportedly co-operating with ACCC.
Penalties for individuals convicted in a cartel case include jail of up to 10 years. Companies can be fined $10 million or 10% of annual turnover.
Deutsche Bank released a statement soon after the charges were laid.
“Deutsche Bank reiterates that it believes it and its staff, including two former staff members Michael Ormaechea and Michael Richardson, acted responsibly, in the interests of clients and in a manner consistent with the Corporations Act and ASIC market integrity rules in relation to ANZ’s institutional share placement in August 2015,” the bank said.
“Both Michael Ormaechea and Michael Richardson are highly regarded and have our full support. We will vigorously defend charges brought by the CDPP (Commonwealth Director of Public Prosecutions) and the ACCC.”
Citi said: “Citi will vigorously defend these allegations on behalf of itself and its employees.”
ANZ Chief Risk Officer Kevin Corbally said: “We believe ANZ acted in accordance with the law in relation to the placement and on that basis the bank intends to defend both the company and our employee.”
Credit rating agency Moody’s says the cartel conduct charges against the ANZ Bank are ‘significant’ and credit negativeThis article was first published by https://www.businessinsider.com.au Author: Chris Pash