CBA should have done more: Federal Court

The Federal Court judge who slapped the Commonwealth Bank with a $5 million pecuniary penalty over its role in setting the bank bill swap rate said the bank should have better supervised its staff.

Justice Beach of the Federal Court delivered the assessment in noting the terms of a court enforceable undertaking entered into by the bank and ASIC, after an in-principle agreement was reached between the two in May.

The bank entered into the EU after Federal Court proceedings were launched by ASIC in January, with the corporate regulator alleging three instances of unconscionable trading and the creation of an artificial price. This in turn manifested a false appearance in regards to the market for certain financial products that were priced or valued off BBSW.

In a media release, ASIC said the bank will pay $15 million, which will be applied to the benefit of the community, with the bank set to lose a further $5 million in covering ASIC's investigation and legal costs.

In handing down the penalty, Justice Beach said the total of $25 million in payments owed by the bank should condemn the actions of traders involved in the BBSW rigging scandal.

"That sum together with the other payments all totaling $25 million should be an adequate denouncement of and deterrence against the unacceptable trading behaviour of individuals within CBA that ought to have known better and a bank that ought to have better supervised its personnel," Justice Beach said.

In addition to settling the fines, ASIC said CBA will engage an independent expert to assess the changes it had made to its policies, procedures, systems, controls, training, guidance and framework for the monitoring and supervision of employees and trading in prime bank bills, with further changes set to be made.

According to ASIC, CBA admitted failure in doing all things necessary to ensure it provided financial services honestly and fairly, adding it also failed to ensure its traders were adequately trained.

Read more: ASICFederal CourtCBAJustice BeachCommonwealth BankBBSWEU
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