Westpac has been accused by the corporate watchdog of insider trading and unconscionable conduct during AustralianSuper and IFM’s purchase of NSW energy company Ausgrid five years ago.Credit:Jessica Hromas
Westpac had acted on behalf of the consortium to manage the interest rate risk associated with its acquisition of 50.4 per cent of the NSW Ausgrid. ASIC has alleged that Westpac was aware it would be selected by the consortium to execute the swap transaction and thus had inside information.
The regulator has further claimed that Westpac got itself set in the market before executing for its client and in doing so affected the market price of the swaps instrument to the detriment of the consortium.
Given the size of the deal it would be prudent practice for Westpac to hedge its own risk - a point that ASIC would doubtless acknowledge. The trouble is,ASIC has contended that Westpac didn’t let the client know.
This probably explains why members of the consortium also watched,with some confusion,price movements of the interest rate as that October day progressed.
ASIC alleges Westpac was aware,or should reasonably have been aware,or was indifferent to the risk,that engaging in the morning trading ahead of executing the swap deal would or had the potential to affect the trading prices.
Westpac,should it decide to argue the case,will probably contend that it was just following convention and was inside the regulatory guidance on the swaps market.