ASIC Hits ANZ with Civil Charges over $2.5 Billion Share Sale

The charges involve alleged cartel arrangements relating to trading in ANZ shares.

The Australian Securities & Investments Commission (ASIC) has filed charges against ANZ Bank, the nation’s third-largest lender, part of a groundbreaking legal case that relates to its $2.5 billion share placement in 2015 and the non-disclosure of material information to all shareholders.

The charges center around the placement of 80.8 million shares at $30.95 each and the lack of disclosure that 25 million of these went to two of the three joint lead managers.

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The Melbourne-based lender, plus its two investment banks Citi and Deutsche Bank, are being sued in a related case for breaking antitrust law. The banks, including JPMorgan, had been required to fulfill their role as underwriters by taking up the shortfall in the raising when investors fail to buy the entire issue. However, JPMorgan has not been charged as it reportedly received immunity in return for information.

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ASIC said that “the shortfall, if disclosed, was information that a reasonable person would expect to have a material effect upon the price of ANZ shares. The market was deprived of information which … should have been available to it.”

The three banks denied any wrongdoing and said they have complied with all laws and obligations. The trio added that this capital raising was like others that have been done in Australia for decades and that they will defend themselves and their staff. They noted that if convicted in this case, it will prevent them from sharing risk by jointly underwriting offerings and may turn down the chance to help in some capital raisings.

ANZ defended the lawsuit and said that “any such allegation should be considered in the context that ANZ’s shares are bought and sold freely by thousands of shareholders in volumes representing hundreds of millions of dollars every business day, including for the period in question.”

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