ANZ now facing civil action over $2.5b share sale
ANZ Banking Group is now facing civil action, as well as criminal cartel charges, over a contentious $2.5 billion share sale in 2015.
The Australian Securities and Investments Commission (ASIC) has started civil penalty proceedings against the bank, alleging it failed to comply with its continuous disclosure obligations in relation to the share offer to institutional investors.
The ASIC case comes just months after landmark criminal cartel charges were laid against ANZ, Citi and Deutsche Bank, and six senior bankers, by the Commonwealth Director of Public Prosecutions (CDPP) over the same sale.
ANZ has said it will defend both cases, which raise questions about the legality of some aspects of share placements, underwriting agreements and share trading practices, and come as banks grapple with the reputational fallout from the banking royal commission.
In its action filed on Friday, ASIC alleges ANZ should have advised the market that the joint lead managers on the deal - Citi, Deutsche Bank and JPMorgan - ended up holding about $791 million of the $2.5 billion of ANZ shares in the placement, when big investors decided not to take up all the shares offered. Citi ended up holding almost 10 million shares, while JPMorgan and Deutsche Bank both had about 7.4 million shares.
Court documents filed by the regulator state the placement was announced on the morning of August 6, 2015 and by that time it was clear the offer had not attracted the interest expected.
The documents highlight a conference call at 8.30pm that night between ANZ's then-treasurer, Rick Moscati, ANZ's then head of capital and structured funding, John Needham, and the underwriting banks.
The next day ANZ announced to the ASX that the capital raising was completed but made no mention of the large portion of stock taken up by the underwriters.
Over the next two days, ASIC claims Mr Moscati and Mr Needham reached a deal with the underwriters on how they would dispose of their shares.
ASIC claims that ANZ breached continuous disclosure laws by failing to notify the ASX that the capital raising had fallen short and that the ensuing meetings aggravated that already "serious" breach.
ANZ on Friday said it was not aware of a precedent for a listed entity to disclose the take-up of shares by underwriters in an equity placement. The 25.5 million shares in question represented less than 1 per cent of the shares on issue at the time, it 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.
The separate DPP action relates to an arrangement or understanding allegedly made between the joint lead managers over the supply of ANZ shares and followed a two-year investigation by the Australian Competition and Consumer Commission.
Deutsche and Citi have vowed to defend the charges against them and their staff. JP Morgan is believed to have immunity.
Under criminal cartel laws, individuals can face up to 10 years' jail or fines up to $420,000 if they are found guilty, while companies could face maximum penalties of 10 per cent of annual turnover, or three times the benefit gained from the behaviour.
Most Viewed in Business
A relationship banned under traditional law.
Our new podcast series from the team behind Phoebe's Fall
View episodes