CANBERRA, Australia – An Australian bank chief executive told a parliamentary committee on Wednesday that traders implicated in market manipulation allegations had been suspended then reinstated without those accusations being judged by a court.
The Australian Securities and Investments Commission, the financial regulator, is suing the ANZ Banking Group in the Federal Court for unconscionable conduct and market manipulation in relation to ANZ’s involvement in setting the bank bill swap reference rate from 2010 to 2012. The bank has denied the allegations.
The rate sets the price of business between banks and other institutions. Rigging the rate can increase profits for both banks and traders.
ANZ chief executive Shayne Elliott told the House Standing Committee on Economics that the bank initiated an internal investigation and suspended “a handful of people” after the regulator raised its allegations. Media reports said seven traders had been suspended on November 2014.
All but two traders were reinstated, despite the court case remaining unresolved, Elliott said.
“We reinstated those employees because they’d done nothing wrong,” Elliott said.
Elliott said the two traders that were fired, Etienne Alexiou and Patrick O’Connor, were guilty of breaches of the bank’s code of conduct that had nothing to do with the regulator’s allegations of market manipulation.
Both Alexiou and O’Connor are suing the bank for wrongful termination. They allege the bank condoned a culture of drugs, alcohol and strippers among senior staff on the trading floor.
Elliott said “a small number” of traders in the global markets section of the bank “behaved appallingly and when we found out about those, we acted immediately.”
The bank had responded with more ethics training and increased monitoring of the markets business, he said.
The ANZ is one 17 banks and two international broking houses named in a class action suit in the U.S. District Court for the Southern District of New York that alleges rigging of the bank bill swap reference rate.
The ANZ has said it will defend the U.S. action and notes that the Australian regulator’s case does not allege that the bank colluded with others.
The chief executives of Australia’s four largest banks must give evidence to the committee at least once a year as part of a new government initiative to increase transparency in the financial sector.