ANZ senior executive Rick Moscati and five other top bankers have been charged with criminal offences over the sale of millions of ANZ shares to institutional investors in 2015.
Competition watchdog the ACCC revealed on Tuesday that three banks – ANZ, Citigroup and Deutsche Bank – had also been charged with criminal cartel offences following an investigation.
The criminal activity allegedly took place in August 2015, when ANZ auctioned $2.5 billion worth of new shares to institutional investors in order to increase its cash reserves.
Under suspicion is the fact that about 25.5 million of these shares, worth close to $790 million, were taken up by Deutsche and Citigroup. This fact was not disclosed to the share market.
The new shares were auctioned off to increase ANZ’s cash reserves so it could cover loan exposes, as required by new regulations.
At the time, the capital raising caught the market by surprise because then-ANZ chief executive Mike Smith had suggested it would not be necessary. ANZ shares suffered their biggest one-day fall in nearly seven years on the announcement, and retail shareholders were angry at the preferential treatment given to institutional investors.
The share auction was organised and underwritten by Citigroup, Deutsche Bank and third big global bank JP Morgan. JP Morgan has not been charged.
Along with Mr Moscati, charges have also been laid against two senior bankers from German-owned Deutsche Bank, and three from US bank Citigroup.
The ACCC said the individuals were “alleged to have been knowingly concerned in some or all of the alleged conduct”.
“These serious charges are the result of an ACCC investigation that has been running for more than two years,” ACCC Chairman Rod Sims said.
“Charges have now been laid by the Commonwealth Director of Public Prosecutions and the matter will be determined by the Court.”
The ACCC made no further comment, except to say “matter is listed before the Downing Centre Local Court in Sydney on 3 July 2018”.
The ACCC’s announcement on Tuesday was expected, after the Commonwealth Director of Public Prosecutions (CDPP) flagged the charges on Friday.
Responding to the news on Friday, ANZ denied any criminal activity.
The big bank’s chief risk officer Kevin Corbally said: “We believe ANZ acted in accordance with the law in relation to the placement and on that basis the bank intends to defend both the company and our employee.”
Citi also refuted the charges, saying: “Citi steadfastly denies the allegations made against it, and certain employees, by the CDPP in relation to Citi’s role as a joint underwriter of the $2.5 billion equity placement conducted by the Australia and New Zealand Banking Group in August 2015.
“Citi will vigorously defend these allegations on behalf of itself and its employees.”