Australian Securities and Investments Commission v Commonwealth Bank of Australia

The Australian Securities and Investments Commission (ASIC) brought proceedings against the Commonwealth Bank of Australia (CBA) concerning allegations of unconscionable conduct in contravention of the Australian Securities and Investments Commission Act 2001 (Cth) and the Corporations Act 2001 (Cth). The dispute centred on CBA's attempts to manipulate the Bank Bill Swap Reference Rate (BBSW) by engaging in improper trading activities in the Bank Bill Market. The Federal Court was tasked with determining the appropriate penalties for these breaches and whether CBA had contravened financial services laws.

The primary legal issues before the court were whether CBA had indeed engaged in unconscionable conduct in contravention of the ASIC Act, and whether it had failed to comply with various obligations under the Corporations Act. Specifically, the court had to assess whether CBA had acted dishonestly, inefficiently, and unfairly in its financial services provision and whether it had neglected to implement adequate policies and procedures to supervise and monitor its staff's conduct. The court also had to consider the appropriate penalty for these breaches, taking into account both general and specific deterrence.

In its reasoning, the court found that CBA had indeed engaged in unconscionable conduct by attempting to manipulate the BBSW rate. The court concluded that this conduct was in contravention of the ASIC Act and the Corporations Act, as CBA had failed to provide financial services efficiently, honestly, and fairly. The court also noted that CBA had not implemented sufficient policies and procedures to prevent and monitor such misconduct. Considering the nature and impact of the breaches, the court deemed a penalty of $5 million appropriate, along with other payments totalling $25 million, to serve as a deterrent and denouncement of CBA’s unacceptable trading behaviour.

The final orders of the court declared that CBA had contravened the ASIC Act and the Corporations Act, imposed a pecuniary penalty of $5 million, and required CBA to pay the plaintiff's costs of and incidental to the proceedings. The court also noted that CBA had provided an enforceable undertaking to pay $15 million into a community benefit fund, and that the plaintiff proposed to issue a direction under the ASIC Act for CBA to pay investigation costs.