The Australian Corporate Regulator Is Pouring Resources Into Catching Interest-Rate Riggers

ASIC chairman Greg Medcraft. Photo: Pritchitt Partners

Australian Securities and Investments Commission is using about 20% of its market enforcement resources to catch interest-rate riggers.

The regulator’s chairman Greg Medcraft said the problem of interest rate rigging is only going to grow and jail time for the guilty would be the best deterrent, the AFR reported.

“It’s a bit like an onion this – the more you peel the more you discover. So putting a timing on it is very difficult,” he said.

“We have to lift the fear and smother the greed. White collar criminals are scared of going to jail. I had ten years on Wall Street and going to jail is the thing that scares them most.

“When they come up to the eighteenth floor and they put people in handcuffs and wheel them off they don’t come back – it sends a message.”

Currently, ASIC has around 60 staff in its market integrity enforcement unit and its interest rate investigation involves about 10 ASIC staff plus a number of external resources.

Last month seven ANZ traders were suspended on full pay pending an ASIC investigation into potential manipulation of the bank bill swap rate (BBSW). ANZ said suspending its employees was a “precaution”.

The BBSW is the rate banks charge each other for transactions on short-term money markets.

“We are allocating a lot of resources to this area at the moment. We have of our 60 market enforcement individuals we [are] nearly ten. That’s 18 per cent focused on this particular area at the moment,” Medcraft said.

“Taking 20 per cent of resources is pretty significant isn’t it – and that’s just enforcement – it doesn’t cover surveillance and other areas.”

ASIC has been looking into the matter since mid-2012. The investigation has already seen the Royal Bank of Scotland pay a $1.6 million penalty in July after the RBS admitted there was evidence of rate rigging in its submissions, while BNP Paribas and UBS were both fined $1 million for their roles in manipulating the interest rate.

There’s more here.

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