Australian cartel case collapse raises questions of regulatory overreach
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Australian cartel case collapse raises questions of regulatory overreach

For four years, a criminal case brought by an Australian regulator against Citi, Deutsche Bank, ANZ and six bankers who were facing jail has looked ill-judged, acting retrospectively against common market practice in a share placement. Now it has collapsed and lessons need to be learned

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The collapse of a criminal cartel case against Citi, Deutsche Bank and ANZ and six of their bankers in Australia is no surprise, and looks like four years wasted for considerable pain and little gain.

From the very outset, the decision to bring criminal rather than civil proceedings against individuals as well as institutions over an unclear area around the marketing of a share placement looked like regulatory overkill.

Here’s the background. In August 2015, a A$2.5 billion ($1.79 billion) share placement by ANZ was underwritten by Citigroup, Deutsche Bank and JPMorgan.

During this placement, ANZ and its arranging banks had a call to discuss 25.5 million shares that had failed to find buyers in the capital raising, in which they discussed selling the shares into the market over a period of time so as to minimize the disruption to the ANZ share price.

Nobody thought anything more about it. Deals like this were commonplace. It’s what bankers call “keeping an orderly market.”

But three years later, in June 2018, the Commonwealth Director of Public Prosecutions alleged cartel conduct among the joint leads, regarding “an arrangement or understanding allegedly made between the joint lead managers in relation to the supply of ANZ shares.”

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