The former CEO of Citigroup in Australia, Stephen Roberts, and former Deutsche Bank's head of Australia, Michael Ormaechea, are among six of the country's most senior bankers from ANZ Bank, Deutsche Bank and Citigroup who have been served with criminal cartel charges in relation to a $2.5 billion capital raising for ANZ in 2015.
Senior investment bankers also served with charges on Tuesday include John McLean and Itay Tuchman from Citigroup and Michael Richardson, formerly of Deutsche Bank, in addition to ANZ group treasurer Rick Moscati, who had already been named.
"ANZ and each of the individuals are alleged to have been knowingly concerned in some or all of the alleged conduct," chairman of the Australian Competition and Consumer Commission Rod Sims said.
If found guilty, each executive could face a jail term of up to 10 years or a fine of up to $420,000. ANZ, Citigroup and Deutsche face fines of $10 million, three times the profit gained or up to 10 per cent of their turnover, which for ANZ equates to more than $2 billion.
Banks stand by execs
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All of the banks have publicly denied the allegations and stated that they will defend the companies and their employees.
Citi said it had not stood down Mr McLean or Mr Tuchman and ANZ said that "Rick [Moscati] was already transitioning to a new role as chief risk officer and at this stage there is no change".
"Deutsche Bank reiterates that it believes it and its staff, including two former staff members, Michael Ormaechea and Michael Richardson, acted responsibly, in the interests of clients and in a manner consistent with the Corporations Act and ASIC market integrity rules in relation to ANZ's institutional share placement in August 2015. Both Michael Ormaechea and Michael Richardson are highly regarded and have our full support," Deutsche said late on Tuesday.
JPMorgan, among three investment banks that underwrote the capital raising, is believed to have been granted immunity from prosecution after self-reporting the issue to regulators.
The Financial Review can also reveal that JPMorgan is believed to have self-reported the issue to the corporate regulator after tripping up on trading rules when it failed to disclose it was selling underwritten ANZ shares to one of its clients.
The tip-off is believed to have sparked the separate investigation by the ACCC that has led to criminal cartel charges being served on Tuesday following a two-year investigation.
Citi's Mr Roberts has now retired, announcing his retirement in March 2015 and leaving Citi in June 2016.
Deutsche's Mr Ormaechea was the co-head of corporate and investment banking for Asia Pacific at the time of the alleged conduct, later becoming country head for Deutsche Bank Australia before retiring last year.
Other investment bankers charged remain working on some of the country's biggest deals, including Mr McLean, who remains Citi's head of capital markets origination for Australia and New Zealand. Mr Tuchman was head of markets and securities services Australia and New Zealand and has now moved to London with Citi, where he is global head of foreign exchange.
Deutsche's Mr Richardson was head of equity capital markets Australia and New Zealand and now holds a similar role at Bank of America Merrill Lynch.
The Australian Financial Review revealed on Monday that a recorded video conference call between ANZ and its investment bankers was expected to show the parties negotiating how 25.5 million shares worth $789.2 million, which failed to find buyers during the bank's $2.5 billion capital raising in 2015, would be sold into the market in order to minimise any downside risk to ANZ's share price.
The recorded discussion is believed to include how the 25.5 million ANZ shares would be sold over a period of time, not lower than a certain price and how the sales would be timed.
It is believed the Australian Competition and Consumer Commission will allege the cartel conduct related to "an arrangement or understanding" allegedly struck between ANZ and its investment banks under laws that prohibit "controlling the output or limiting the amount of goods and services" available to buyers.
Citigroup also reiterated that "the allegations involve an area of financial markets activity that has not been considered by any Australian court or addressed in any regulatory guidance notes previously published by the ACCC or the Australian Securities and Investments Commission (ASIC). This is a highly technical area and if the ACCC believes there are matters to address, these should be clarified by law or regulation or consultation."
The ACCC said in a statement late on Tuesday that "the charges involve alleged cartel arrangements relating to trading in ANZ shares held by Deutsche Bank and Citigroup".
"These serious charges are the result of an ACCC investigation that has been running for more than two years," ACCC chairman Mr Sims said.
The matter is listed before the Downing Centre Local Court in Sydney on July 3.
The ACCC said the Competition and Consumer Act required any trial of such offences to proceed by way of indictment in the Federal Court of Australia or a state or territory Supreme Court.
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