Westpac hit with insider trading allegations over Ausgrid privatisation

Westpac has been accused by the corporate watchdog of insider trading and unconscionable conduct during AustralianSuper and IFM’s purchase of NSW energy company Ausgrid five years ago.

The Australian Securities and Investments Commission alleges that Westpac breached its financial services licence when it was arranging a financial instrument used in large transactions to manage interest rate fluctuations, known as an interest rate swap.

Westpac acknowledged its receipt of ASIC’s claim in a statement to the Australian Securities Exchange on Wednesday morning.

“Westpac takes these allegations very seriously and is considering its position having just received the originating application and concise statement of claim,” the bank said.

“As the matter is now before the court it would not be appropriate to comment further at this time.”

In September 2016 the New South Wales Government sold Ausgrid to AustralianSuper and IFM Investors, for $16 billion.

ASIC’s allegations relate to Westpac’s role in executing a $12 billion interest rate swap transaction with a consortium of AustralianSuper and a group of IFM entities (Consortium).

ASIC said in a statement that Westpac knew or believed it would be selected by the Consortium to execute the interest rate swap transaction on that morning. ASIC alleges this was inside information.

“Whilst in possession of the alleged inside information, Westpac’s traders acquired and disposed of interest rate derivative products in order to pre-position Westpac in anticipation of the execution of the swap transaction.”

More to come