ASIC retrofits misconduct on earthy traders
Westpac rates' traders "cannot recall" the numerous, colourful, recorded conversations relied on by ASIC to establish a pattern of unconscionable conduct by the bank in the bank bill swap market between 2010 and 2012. Philip Crutchfield, opening the ASIC case in a civil action against the bank in the Federal Court in Melbourne yesterday, cherry picked these long ago chats between work colleagues to sketch a pattern of conduct he summed up as "unlawful."As witnesses from Westpac take their turn in the stand, they will confirm affidavits that reflect on these recordings and trading behaviour that leave the court with "no clearer explanation," in ASIC's version, anyway.Crutchfield entertained the court with audio and transcripts of frank, internal conversations among key Westpac personnel, often between Colin Roden, then managing director, group treasury at Westpac and his subordinate Sophie Johnson.These recordings skip over "shenanigans" - a popular noun among key staff - and detail a catalogue of instances of shorthand trader chat on plans and outcomes on numerous trading days that suit the ASIC case.Summing up, these recordings and emails, "show a pattern of conduct to manipulate the rate," Crutchfield assured Justice Beach.ASIC's position on the interpretation of an abundant catalogue is didactic.Crutchfield worked his way through a score of favourable exchanges to assert which snippets related to instances of hedging and others which were nefarious.Relying on the contributions of Roden, Crutchfield sampled the best for the court."Just load up on paper so we can churn it out," Roden directed one day. The object, in this extract, was "spending money to get the BBSW rate set as low as possible," Roden said later.Sticking to the ASIC take on a matter sure to be contested by the bank in the days ahead, Crutchfield allowed that "some [conversations and trading] are hedging, and legitimate trading."Other strands of dialogue suit the ASIC case better.Drawing in one of the C-suite names at Westpac, Crutchfield decoded an email from Roden to Rob Whitfield, the head of Westpac Institutional Bank."Market prices and hedges are all over the place," Roden told the WIB chief, going on to assure his boss that "our short poddy [position] will influence the rate set."ASIC's counsel drew his conclusion: "It doesn't look like hedging."