ANZ, Citi, Deutsche Bank Accused of Engaging in Cartel Conduct

By Robb M. Stewart 

MELBOURNE, Australia--Australia's antitrust regulator has taken the unusual step of criminally charging one of the country's biggest banks and two underwriters of a 2015 fundraising round for the bank.

It alleges cartel conduct.

Charges related to trading in Australia & New Zealand Banking Group Ltd. shares by the underwriters were filed Tuesday by Australia's government prosecutions agency against ANZ, Citigroup Inc. and Deutsche Bank AG, as well as several senior executives of all three.

ANZ and each of the individuals named are alleged to have been knowingly involved in some or all of the conduct, according to the Australian Competition and Consumer Commission, which has been investigating the matter for more than two years.

Each of the banks disputes the allegations and said they plan to defend themselves and their employees.

In 2015, ANZ surprised investors with plans to raise 3 billion Australian dollars (US$2.29 billion) to meet regulatory demands for stronger buffers against the risk of future crises. The bulk was raised through an institutional share placement underwritten by Citi, Deutsch Bank and the local arm of J.P. Morgan

The placement was completed that August when about 80.8 million shares were issued.

The competition commission hasn't detailed its allegations, and on Tuesday said it wouldn't comment further as the matter is now before the court. The case is listed to be heard by a Sydney court on July 3.

Investigations by the regulator more commonly lead to civil action rather than criminal charges, which are usually harder to prove. Andrew Grant, a lecturer at the University of Sydney Business School, said the authorities' decision here suggests they feel their case is strong.

Companies regularly put together syndicates to underwrite large capital raisings, and Citi said the practice hasn't previously been considered by an Australian court or addressed in published regulatory guidance. It denied any wrongdoing and said that if the regulator believes there are matters to address, they "should be clarified by law or regulation or consultation."

The regulator alleges the underwriters reached an understanding on the disposal of shares outstanding in the placement, amounting to less than 1% of the total, Citi said. It noted that ANZ shares are bought and sold freely by thousands of investors every day, including during the period in question.

Last week, ANZ said it believes it acted within the law, and is cooperating with an investigation by the corporate regulator into whether it should have said in an August 2015 statement that the underwriters had bought about 0.9% of the shares issued. Reached Tuesday, the bank referred back to that earlier statement.

Deutsche Bank said it and the former executive who were charged acted responsibly and in the interests of clients.

Write to Robb M. Stewart at [e-mail]

(END) Dow Jones Newswires

June 05, 2018 05:38 ET (09:38 GMT)

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