The Australian Securities and Investments Commission (ASIC) has issued a stern warning to financial institutions over what it calls “appalling” behaviour. Chairman of the watchdog group Greg Medcraft said Australia’s biggest banks are inhibiting regulations and investigations into the fixing of benchmark interest rates, although he did not call out any specific company. The ASIC has been investigating a potential rigging of the bank swap rate in the Australian financial sector after several other shady deals internationally came to light. During a Senate estimates hearing in Canberra on Wednesday, Mr. Medcraft warned banks that the ASIC has the tools necessary to rein in unlawful behaviour of industry players.
In the UK, many financial institutions faced heavy fines over the fixing of the London Interbank Offered Rate (LIBOR). Additionally, seven traders from ANZ Banking Group were suspended as part of an Australian investigation. Mr. Medcraft said that although his rhetoric has been critical of the financial culture in Australia, he is actually looking for co-operations between ASIC and large financial institutions. He noted frustration during the investigation as he found that many banking giants were intentionally disruptive and evasive during the process. “We can do this the easy way or we can do this the hard way,” he said.
The chairman of ASIC went further to say that the reaction to the investigation from banks was “absolutely appalling” and represented a “rotten” culture. The rhetoric from the regulatory body has been more powerful as of late. ASIC Commissioner Greg Tanzer said the process of regulation was more than just paperwork. The watchdog has noted that it is currently in discussions with the director of public prosecutions to evaluate criminal law cases. Mr. Medcraft said the regulating body would continue to push regulation to drive out the rotten culture in Australia’s financial sector. “It’s a warning to everybody,” he said.
Author: Simon Herrmann
Jun 03, 2015
Simon is a financial analyst at independent research firm Wise-owl specialised in small-mid cap growth opportunities and ethical investment opportunities. Simon's aim is to disrupt the cliché approach to investment decision making as he believes that socially and environmentally responsible behaviour is a necessity to long-term wealth creation. Simon has a deep fundamental understanding of the global financial landscape and has compiled 300+ research reports, valuations and corporate appraisals. Simon is commonly featured in major media outlets and his research is published weekly in The Australian.