In today’s Money Morning…let me explain what’s going on…don’t change the rules, change the game…not just from one bank, but from the entire system…and more…
As I wrote almost two weeks ago now, trust in finance and banking is dead and buried.
The lessons that should have been learned from the ‘08 crash simply haven’t been.
Instead, the bad actors and greedy culture was only forced into hiding…momentarily. The problems were addressed and exposed, but never truly removed.
If you want proof of that just look at the latest allegations levelled at Westpac. Slapped with yet another insider trading lawsuit from ASIC. And just as it looked the bank was finally moving past its darker days.
Well, not anymore.
Now the reputation and accountability of this bank, and frankly all the banks, will come into question once more. As they should, in my view. Because despite the relatively recent royal commission, I still don’t think we’ve seen enough change.
More importantly, at this point I don’t think there is much hope for any meaningful change.
No matter what sort of punishment or fine Westpac may face, I can’t see it being enough.
And that’s if they face any sort of penalty at all. After all, this lawsuit has only just begun. There is a possibility that these allegations may turn out to be false or unfounded.
But whether that is the case this time or not, it seems clear to me that there is no way of stopping the banks’ greed…
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Any given opportunity
If you haven’t caught up to speed just yet, let me explain what’s going on.
Yesterday ASIC caught everyone off guard when it stated it had started civil proceedings against Westpac for ‘insider trading’. Taking the bank to Federal Court for its role in a $12 billion deal that, according to ASIC, was subsequently used for financial gain due to privy information.
See, back in 2016, power provider Ausgrid was up for privatisation. And after Chinese bidders were knocked back by the government, AustralianSuper and IFM Investors (a consortium of super funds) jumped at the opportunity.
In order to get the deal done though, a bank had to be involved and that’s where, ASIC alleges, the insider trading has stemmed from:
‘ASIC alleges that by about 8:30am on 20 October 2016, Westpac knew, or believed, it would be selected by the Consortium to execute the interest rate swap transaction on that morning. ASIC alleges this was inside information.
‘When the market opened at 8:30am, whilst in possession of the alleged inside information, Westpac’s traders acquired and disposed of interest rate derivative products in order to pre-position Westpac in anticipation of the execution of the swap transaction.’
Now, again, these allegations haven’t been successfully proved in court just yet.
But the fact that ASIC is going after Westpac again is either a sign of a grudge, or some deeply seeded problems. Either way, I doubt the regulator is going to come after the bank again without being damn sure about their claims.
After all, Westpac and ASIC have had some heated exchanges in the past two years. With both sides taking some wins and losses.
As for who will come out on top this time, well, we’ll have to wait and see.
In my view though, the outcome is irrelevant at this point. The banks are rotten to the core and likely always will be.
And honestly, I kind of get it.
Greed is a human trait, and when given an opportunity to profit, I’d wager most people would take it. Say what you want about whether avarice is innate within all of us, but it doesn’t surprise me that these individuals or groups of people saw a chance and took it.
The problem is that this chance or opportunity existed in the first place…
Don’t change the rules, change the game
It’s clear that no matter how ethical some bankers may be, or how effective our regulators are, banking is still only as good as the humans involved.
For that reason, the best solution is to take the human element out of banking!
A proposal that sounds great in theory but is obviously lacking. Or at least, it would’ve been a few years ago…
Now, with the advent of cryptocurrencies and blockchain, the game is truly changing.
The system that was once ruled by centralised people and power is being replaced. Undone by this incredible new technology that will free banking and finance from their grasp. And instead, put the power back in your own hands.
The way it should be.
A matter that is very real, very pertinent, and very complex. But it is something that you can’t afford to ignore.
We are about to enter an era of New Money, and we want to show it to you. Keeping you in the loop to ensure that you stay ahead of this ‘new game’, as well as be wary of the old one.
And what better place to start than with a candid explainer from our very own Ryan Dinse and Greg Canavan. Dissecting and divulging all the gritty details behind our current centralised monstrosity, and the forthcoming decentralised revolution.
Check it out for yourself, right here.
Because at the end of the day, most of us already know how bad modern finance and banking have become. That should be painfully obvious if you’re a regular reader of Money Morning anyway.
This latest infraction by Westpac is simply the latest example in a long line of misdeeds.
Not just from one bank, but from the entire system.
The only difference now is that there is a genuine alternative. And I for one can’t wait to see the new game it will create.
Editor, Money Morning
PS: Our publication Money Morning is a fantastic place to start on your investment journey. We talk about the big trends driving the most innovative stocks on the ASX. Learn all about it here