The Federal Court ruled Westpac's conduct in handling bank bill swap rates was "unconscionable" on four of the 16 occasions that ASIC alleged the bank manipulated the BBSW.
While ASIC failed to prove Westpac traders had manipulated the BBSW, the bank was found to have inadequate procedures and training. It contravened its financial services licensee obligations, the court ruled. It is yet to decide on Westpac's penalties.
"Westpac's conduct was against commercial conscience as informed by the normative standards and their implicit values enshrined in the text, context and purpose of the ASIC Act specifically and the Corporations Act generally," Justice Jonathan Beach said in his judgement.
In the four occasions where the bank was ruled to have engaged in unconscionable conduct, it traded with the dominant purpose of influencing the yields of traded Prime Bank Bills and the BBSW was set in a way that was favourable to its rate set exposure.
A future hearing will decide the penalty and relief. The date is yet to be determined.
ASIC has been going after potential BBSW misconduct for about five years now. Early casualties included UBS in 2013 and BNP Paribas and the Royal Bank of Scotland in 2014.
Westpac is the last of the Big Four to face the court on ASIC's BBSW investigations.
Earlier this month, CBA copped $25 million and agreed to enter an enforceable undertaking with ASIC, in a settlement subject to Federal Court approval. The corporate regulator had dragged it to the court in January, alleging BBSW rate rigging. CBA acknowledged its conduct was unconscionable on five occasions and its policies and systems were inadequate for monitoring staff trading and communication to prevent the situation.
NAB and ANZ faced $10 million penalties from the Court in November, 2017. Both also paid $20 million each to ASIC to cover its investigation costs and another $20 million each towards community benefits.
Earlier this week, a new methodology of calculating the BBSW came into effect, which calculates directly from market transactions during a longer rate-set window and involving a larger number of participants.