ASIC accepts court enforceable undertaking from CBA

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Commonwealth Bank of Australia (CBA) has entered into a court enforceable undertaking with ASIC in relation to their bank bill trading business and their participation in the setting of the Bank Bill Swap Rate (BBSW), a key benchmark and reference interest rate in the Australian financial system.

As part of the undertaking, CBA will pay $15 million to be applied to the benefit of the community and $5 million towards ASIC’s investigation and legal costs.

CBA will also engage an independent expert to assess changes CBA has made (and will make) to its policies, procedures, systems, controls, training, guidance and framework for the monitoring and supervision of employees and trading in Prime Bank Bills.

On 21 June 2018, the Federal Court in Melbourne imposed pecuniary penalties totalling $5 million on CBA for attempting to engage in unconscionable conduct in relation to BBSW. CBA admitted to attempting to seek to affect where BBSW set on five occasions in the period 31 January 2012 to 15 June 2012.

CBA also admitted that it failed to do all things necessary to ensure that they provided financial services honestly and fairly and that its traders were adequately trained.

Justice Beach of the Federal Court noted the terms of the court enforceable undertaking and, in imposing the pecuniary penalty of $5 million, stated ‘… that sum together with the other payments all totalling $25 million should be an adequate denouncement of and deterrence against the unacceptable trading behaviour of individuals within CBA that ought to have known better and a bank that ought to have better supervised its personnel.’

Download the enforceable undertaking

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