SYDNEY (Reuters) – JPMorgan Chase & Co (JPM.N) began internal discussions that would lead to immunity from prosecution over a troubled Australian capital raising two years before two rivals were charged with criminal cartel behavior, a court heard on Thursday.
A former JPMorgan banker gave the timeline as the first witness to testify in a legal battle that is being closely watched by investment bankers around the world because it may change the way they are permitted to conduct capital raising.
All but JPMorgan were charged last year with withholding details of the sale process to investors. Prosecutors accuse the three banks of forming a cartel to restrict the supply of ANZ shares and maintain their price after the banks were unable to sell them all to regular investors, court documents showed.
JPMorgan was given immunity on condition that it cooperate with authorities, the court previously heard.
The defendants’ lawyers want to question prosecution witnesses to determine how and when they came to give signed statements, and who was involved.
“I received a call from my boss in Hong Kong, Nicholas Johnson, telling me to be (available) in mid-March 2016,” JPMorgan’s former head of equity capital markets, Richard Galvin, told a packed court room in Sydney on Thursday.
At a meeting a few days later with company lawyers in Sydney, “they mentioned there was a matter that had come up around the ANZ capital raising,” Galvin said.
In June 2016, Galvin said he received a “letter of comfort” from the Australian Competition and Consumer Commission (ACCC), assuring him immunity if he co-operated with their investigation into the capital raising.
The next month, he met ACCC investigators during which they began to draft a statement about his recollection of the raising, Galvin told the court.
Two years later, in July 2018, the ACCC brought criminal charges against Citi, Deutsche and ANZ.
The banks and their executives have yet to enter formal pleas but have said they will defend the case.
ANZ, Citi, Deutsche and JPMorgan have declined to comment on the matter outside of court hearings.
The pre-trial hearing continued on Thursday.
Reporting by Byron Kaye; Editing by Christopher Cushing
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