CBA Commonwealth Bank Of Australia

MELBOURNE, Australia—A lawsuit filed in the U.S. accuses Australia's biggest banks and a number of international investment banks of fixing Australia's primary interest-rate benchmark.

The class-action lawsuit echoes allegations against three of the Australian lenders by the country's securities regulator, which accuses them of manipulating the bank-bill swap rate from 2010-2012. All three have denied wrongdoing.

A lawsuit, filed by two U.S. investment funds and a trader, casts a wider net, claiming that more than a dozen banks and two brokerages intentionally and systematically manipulated the benchmark rate and rate-based derivatives prices to gain hundreds of millions of dollars or more in illegitimate profits.

The suit—filed on behalf of anyone who engaged in U.S.-based transactions priced, benchmarked or settled based on the bank-bill swap rate from at least January 2003—demands a jury trial and is seeking injunctions against the defendants and damages for the alleged violations.

The filing names, among others, Australia & New Zealand Banking Group Ltd., Commonwealth Bank of Australia Ltd., National Australia Bank Ltd., Macquarie Group Ltd. and Westpac Banking Corp.

The Australian Securities and Investments Commission had previously filed lawsuits against National Australia Bank, Westpac and ANZ.

The U.S. lawsuit claims that the bank communications the commission filed in Australia as part of its cases show that the defendants manipulated the benchmark rate and the prices of derivatives based on the rate.

The suit is led by Sonterra Capital Master Fund, FrontPoint Financial Services Fund LP and trader Richard Dennis, and alleges that the plaintiffs manipulated money-market transactions during the fixing window for the bank-bill swap rate, made false rate submissions, bought or sold money-market instruments at a loss to create artificial derivatives prices, and shared proprietary information on derivatives based on the bank-bill swap rate.

The result, the suit alleges, was that members of the class action were overcharged and underpaid in their own transactions and were unable to accurately price derivatives based on the benchmark rate or determine their settlement value.

Westpac denied the allegations in the claim and said that if served, it would defend the allegations vigorously. ANZ and Commonwealth Bank also said they planned to defend against any action, while National Australia Bank reiterated that it didn't agree with the claims previously made by Australia's securities regulator. Macquarie declined to comment.

A spokesman at HSBC Holdings PLC, which was among the international banks named in the class-action suit, said the company wasn't able to comment on continuing legal action. Other plaintiffs weren't immediately reachable for comment.

The lawsuit was filed in the U.S. District Court for the Southern District of New York on Tuesday, according to a copy viewed by The Wall Street Journal.

In June, the Australian Securities and Investments Commission launched legal action against National Australia Bank in the federal court in Melbourne, alleging "unconscionable conduct" and market manipulation with regard to rate setting between June 2010 and December 2012. The commission began similar proceedings against Westpac in early April and against ANZ a month earlier.

Since 2012, the regulator has been investigating banks' trading dating back to 2007 in Australia's bank-bill swap-rate market, the benchmark used in the country's markets. The probe came after rate-fixing scandals elsewhere, including one over manipulation of the London interbank offered rate, or Libor.

Before late September 2013, the Australian benchmark was based on submissions from up to 14 local and overseas banks. After eliminating the highest and lowest, the Australian Financial Markets Association would calculate the mean of the rest. Since September 2013, the benchmark has used an electronic compilation of the midpoint in the locally traded market for reference bank bills, eliminating the need for submissions from the banks.

On Thursday, ANZ said that there had been no allegations by the Australian regulator of collusion among the banks it has taken action against.

Write to Robb M. Stewart at robb.stewart@wsj.com

(END) Dow Jones Newswires

August 18, 2016 06:55 ET (10:55 GMT)

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