Westpac will learn this afternoon the size of the penalty it will pay following an adverse judgment in May centred on unconscionable conduct in the bank bill market in recent years.
The bank is pinning its hopes on a penalty as low as A$3 million while ASIC angered a Federal Court judge at a hearing yesterday with fantastic numbers 20 times as large.
Justice Jonathan Beach five months ago found Westpac was in breach of its obligations under its financial services licence at times in 2010 while also held to have engaged in unconscionable conduct.
ASIC’s counsel Philip Crutchfield entered into argy-bargy with Beach.
“You can’t recharacterise my findings,” Beach told Crutchfield.
“You’re not serious about that, are you? You’re trying to inflate the maximum penalty to $59 million.
‘If I’m with the bank … the maximum penalty is $3.3 million.”
Then a little later: “You shouldn’t use inflammatory or exaggerated language. All I’m here doing is … applying the law and looking at the characterisation of conduct as I’ve found for the purposes of determining the maximum liability for the penalty, and then [working out] the appropriate penalty that I should impose upon Westpac.”
Beach told the court: “The gist of this conduct is endeavouring to manipulate a key benchmark or rate. Well, why shouldn’t I impose the maximum – the $3.3 million to send a signal to the marketplace.
“Why shouldn’t I send a signal that, you try this again, and you will be whacked with the maximum?”
Westpac’s counsel Matthew Darke encouraged these thoughts.
“Even if your honour accepted my position, … by imposing a penalty that is very close to the maximum, that is a million dollars per contravention, that would send a clear message to the market,” he said.
“Your honour doesn’t need to penalise us at the absolute maximum in order to send that message, but it’s not appropriate in this case to apply the absolute maximum.”