The corporate regulator has called on the board of ANZ to reflect on what changes the bank needs to make after it failed to overturn a Federal Court decision that it breached the law during a controversial $2.5 billion capital-raising almost a decade ago.
ANZ should have told the market that three investment banks, Citi, Deutsche and JP Morgan, which underwrote its 2015 capital-raise took up more than 25 million of ANZ’s unsold shares – the subject of a failed criminal cartel case – the Federal Court ruled on Wednesday as it struck out ANZ’s appeal and ended a lengthy legal battle.
ANZ was found to have breached its continuous disclosure obligations during a controversial $2.5 billion equity capital-raising almost a decade ago.Credit: Oscar Colman
Australian Securities and Investments Commission (ASIC) chair Joe Longo said following the court judgement, the ANZ board should reflect on the judge’s statements.
“We filed these proceedings back in 2018, ASIC considered at all times it was a very significant shortfall. It was material and it should have been disclosed to the market, and it wasn’t,” Longo said on Wednesday.
“That view was upheld by a trial judge [last year] and has now been upheld by the full court. It’s really a matter for the ANZ board to reflect on these circumstances and see what changes, if any, they need to be making in their approach to these issues.”
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In 2015, ANZ did not tell investors it had fallen short by $790 million on the targeted capital required from institutional investors, and relied on the three investment banks to underwrite it. ANZ sought assurances from the underwriters they would “do the right thing” and trade “on a longer-term basis”.
The bank had argued the shortfall would not have harmed the overall value of the bank and there was no “disorderly” trading that would put downward pressure on the share price. But justices Michael Lee, Brigitte Markovic and Catherine Button dismissed the appeal and ordered ANZ to pay the corporate regulator’s costs. The Federal Court last year handed down a $900,000 fine.
“The mere fact that assurances were sought by senior officers of ANZ demonstrates that there was a real and abiding concern for reassurance,” Justice Lee wrote.
