The Federal Court has today ordered Australia and New Zealand Banking Group Limited (ANZ) to pay a penalty of $900,000 for breaching its continuous disclosure obligation during a $2.5 billion institutional share placement in 2015.

The Court declared that ANZ contravened section 674(2) of the Corporations Act by failing to notify the Australian Securities Exchange (ASX) that ANZ shares, with a value of between approximately $754 million and $790 million of the $2.5 billion of ANZ shares offered in an Institutional Placement, were to be acquired by its underwriters.

ASIC Deputy Chair Karen Chester said, ‘This is a landmark case for ASIC. Today’s decision confirms the paramount importance of continuous disclosure. The penalty and remarks from the Judge today are a clear and resolute message to ANZ and the market that this conduct was very serious. It also confirms that a significant take-up of shares by underwriters (in a share placement) must be disclosed to the market and investors.

‘If such a contravention occurred today, the maximum penalty could be anywhere between $15 million to $780 million. Listed entities should see today’s penalty decision as a strong and purposeful warning to fully meet their continuous disclosure obligations.

‘ASIC will continue to enforce the continuous disclosure regime to ensure investors are provided material information to make informed investment decisions. Continuous disclosure is key to maintaining market integrity,’ concluded Ms Chester.

When delivering his reasons, Justice Moshinsky stated that the contravention is very serious, and a large penalty is required to achieve deterrence.

ANZ was also ordered to pay ASIC’s costs of and incidental to the proceedings.

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Reasons for judgment (PDF 259 KB)

Background

The maximum penalty for a single breach of continuous disclosure laws (sub-section 674(2) of the Corporations Act) by a body corporate in 2015 was $1 million.

The maximum penalty increased in 2019 to the greatest of:

• 50,000 penalty units (currently $15.65 million),
• three times the benefit obtained and detriment avoided, or
• 10% of annual turnover, capped at 2.5 million penalty units (currently $782.5 million).

The value of a penalty unit is prescribed by the Crimes Act 1914 and is currently $313 for offences committed on or after 1 July 2023.

On 6 August 2015, ANZ issued a release to the ASX, “ANZ announces Institutional Placement (fully underwritten) and Share Purchase Plan to raise a total of $3 billion”.

On 7 August 2015, ANZ issued a release to the ASX in respect of the placement stating among other things, “ANZ today announced that it had raised $2.5 billion in new equity capital through the placement of approximately 80.8 million ANZ ordinary shares at the price of $30.95 per share”. ANZ was aware, prior to this statement, that underwriters had allocated to themselves between $754 million and $790 million of placement shares.

On 21 June 2019, the Court ordered that ASIC’s proceedings be stayed until the hearing and final determination of the criminal proceedings brought by the Australian Competition and Consumer Commission against ANZ and Mr Richard Moscati. These criminal charges were later dropped, and the stay of ASIC’s proceeding was lifted in February 2022.

On 13 October 2023, Justice Moshinsky delivered his reasons for liability (23-277MR). His Honour’s reasons on penalty are yet to be published.

Editor's note:

On 14 December 2023 ANZ appealed the Court’s decision.  A date for the hearing of the appeal is yet to be listed.

Editor's note 2: 

The hearing of ANZ’s appeal is listed on 23 - 24 May 2024 in the Federal Court of Australia in Melbourne.

Editor's note 3:

The Full Court heard ANZ’s appeal on 23 and 24 May 2024. Judgment has been reserved.