CANBERRA (Parliament Politics Magazine) – Australia has dropped a cartel case against Citigroup Inc., Deutsche Bank AG, and numerous former employees against a $1.8 billion stock offering, a startling retreat from the biggest white-collar criminal trail of the country.
Federal prosecutors announced on Friday that they had dropped the case after examining the evidence and determining that “there were no longer reasonable prospects of conviction.” This happened after almost four years of pre-trial hearings in crowded courtrooms.
In recent months, prosecutors have restricted the scope of the lawsuit. Charges that were placed against the former CEO of Citi in Australia, as well as the client for the stock issue in question, Australia and New Zealand Banking Group Ltd, and the former treasurer of ANZ, had already been withdrawn.
The decision puts an end to a potentially extensive challenge to the way investment banks conduct capital raisings as joint lead managers, as well as the danger of time in jail for former senior executives from some of the world’s largest investment banks.
Conference calls shortly after the 2015 stock issuance, in which the banks detailed how they were left with unissued shares, were at the heart of the lawsuit. In the conversation, their employees were overheard indicating they would hold off on selling the stock to avoid a rush of new stock flooding the market and driving the price down.
In a statement, Deutsche Bank stated that they had always maintained that their bank and staff operated in a responsible manner in the interests of clients, and in accordance with all rules and regulations. They acknowledge the profound impact this case had had on the lives of those people who were involved, but they were delighted to see that they had vindication.
‘Extremely significant influence’
Michael Richardson, Deutsche’s Australian head of equities capital markets from the year 2008 to 2017 and one of the individual defendants in the case, said that he would never get the previous four years of his life.
It had had a huge impact on him, his business career, and his family, and he was still baffled as to why he had been forced to go through all that, he added in a statement. He was looking forward to resuming his business career minus the stress and interruption that the affair had caused.
Citi said it had “steadfastly denied the allegations and is looking forward to putting this matter behind us”.
ANZ did not respond to a request for comment right away. When it was taken out from the matter in October, it commented it has always acted in an awful manner.
JPMorgan Chase & Co, a third investment bank involved in the stock offering, was also present on the conference calls. It warned the regulators about a potential perception of collaboration on legal advice in exchange for protection from prosecution, according to former employees who testified at the hearings, adding that they never thought the discussions were unlawful.
JPMorgan’s spokespeople weren’t available for comment immediately.
The Australian Competition and Consumer Commission, which submitted the case to prosecutors in the first place, said it accepted the ruling and will examine what lessons might be learned from this situation alongside prosecutors.
