Former JPMorgan banker testifies for cartel prosecution: there was no agreement

On Friday, December 6th, in a prosecution hearing against a potential criminal cartel case involving Deutsche Bank AG and Citigroup INC, the former JPMorgan head of markets, Jeff Herbert-Smith, served as a prosecution witness claiming that the banks never colluded in the first place.

The testimony actually served as a blow to the prosecution case that was relying on JPMorgan’s support for the case that the 3 investment banks formed a cartel in a A$2.5 billion share issue for New Zealand Banking Group and Australia in 2015.

JPMorgan was given immunity for agreeing to testify in the case. The charges were brought up by the the Australian Competition and Consumer Commission or ACCC. The accusations are that Deutsche and Citi, along with their client (the 4th largest bank in Australia) withheld details of the sale to bolster the price of the stock.

The collusion that reportedly happened during the capital raising was not supported as a fact by Herbert-Smith, who commented that his first meetings with the ACCC over the stock sale took place in March 2016, just 7 months after the capital raising.

This is what the former JPMorgan markets head said regarding the allegations of collusion between the three global investment banks:

I disagreed and stood my ground. In relation to the part of the call (between the bankers) where people said they would stay out of the market of the day… it was not an agreement. It was three independent positions which happened to be the same.

There is no comment from ANZ and the three banks, except comments made in court. Mr. Herbert-Smith reportedly left JPMorgan in the beginning of 2016, as Reuters reported.

The charges by he ACCC were brought up in June 2018, when ANZ, Deutsche, Citi and former executives in the banks were charged.

More about Deutsche Bank and Citi can be found here:

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