The Australian Securities and Investments Commission on Friday escalated its wrangle with ANZ over the bank's alleged malfeasance in the short term money market, with the regulator initiating a case in the Federal Court seeking pecuniary penalties and an order requiring ANZ to implement a compliance program. On Friday, ASIC said it had commenced legal proceedings in the Federal Court in Melbourne against ANZ for unconscionable conduct and market manipulation in relation to ANZ's involvement in setting the bank bill swap reference rate between March 2010 and May 2012. ASIC alleges that ANZ "traded in a manner intended to create an artificial price for bank bills on 44 separate days" during that period.In its statement of claim, ASIC provides great detail on the methods, trading positions, traders and managers said to be involved in the conduct.Bank records arm ASIC with most of the evidence to support their allegations, including instant chat messages and audio recordingsFor example, messages (edited below) exchanged between key staff on just one day include:•    "We'll be able to defend the rate … if not push it higher;"•    "Offloading them into the rate set to protect it;"•    "Just keep going until we find the bid … I want the rate set as high as … possible;" and•    "That represents A$3 million of income to us."On one occasion in November 2011, ANZ accounted for 48 per cent of the bank bill volume transacted through brokers ICAP and Tullett Perron.ANZ traders and managers mentioned by name in ASIC's statement of claim worked on ANZ's mismatch desk, liquidity desk, swap desk, interest rates option desk and foreign exchange forwards desk. In a media release on Friday ANZ said: "ASIC has advised ANZ that it has no concerns about the bank's current market practices and ANZ notes there has been no allegation of collusion between it and other institutions. "We believe the Commission's statement of claim is based on a misunderstanding of how bank bill issuance and interest rate risk management operates and the limited case law which applies to this area."ANZ went on to state that "our practices in the BBSW market were consistent with Australian market practices in wholesale financial markets and we reject ASIC's characterisation of the transactions in question."ASIC has been investigating BBSW panel bank members in relation to the integrity of their past involvement in the BBSW submission process since mid-2012.ASIC's investigations into misconduct around financial benchmarks have so far seen the agency accept enforceable undertakings from global investment banks UBS, BNP Paribas and the Royal Bank of Scotland.The Australian Financial Review reports that ASIC is preparing to bring cases against the other big banks for alleged interest rate manipulation.