The Australian Securities & Investments Commission (ASIC) has filed a lawsuit against the Commonwealth Bank of Australia (CBA) over the alleged misconduct and manipulation of a key inter-bank interest rate.

In a case filed in the Federal Court, the Australian financial watchdog alleged that CBA manipulated the bank bill swap reference rate (BBSW) on three occasions between January and October 2012.

The rate rigged by the CBA for its own advantage created an artificial price and a false appearance of the market for some products, ASIC alleged.

The BBSW is a key interest rate that is used as the benchmark for interest rates for numerous products, mainly for business loans, currency derivatives as well as floating rate bonds.

ASIC in a statement said CBA “traded with the intention of affecting the level at which BBSW was set so as to maximise its profits or minimise its losses to the detriment of those holding opposite positions to CBA’s.

“ASIC alleges it was unconscionable for CBA to trade in this way, and also to enter into products priced off the BBSW without disclosing its trading practices to its customers and counterparties.”

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By GlobalData

The case has been filed less than two weeks before the formal opening of the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry on 12 February 2018. CBA submitted its submission to the royal commission on 29 January, the day before ASIC initiated legal proceedings.

CBA is the fourth Australian bank to face ASIC’s accusations, and the seventh in total. Earlier, Australia and New Zealand Banking Group (ANZ), National Australia Bank (NAB), Westpac, Royal Bank of Scotland (RBS), UBS and BNP Paribas also faced similar charges and settled their case with ASIC, except Westpac that  faced the charges in court.