Bank language under legal lens
Court proceedings against Westpac have focused on the meaning of the term “f*ck it”.
Westpac is accused of meddling with the bank bill swap rate (BBSW), which underpins the pricing of everything from financial derivates marketed by banks to investors through to rates on credit cards or home loans.
“I thought f*ck it, I may as well f*ck it. We've got so much money on it, we just had to do it,” Westpac's global treasury boss Colin Roden was reported to have said in an exchange in 2010.
The BBSW is set every day by a group of bankers including Mr Roden, who decide on the appropriate rate to create a “benchmark” for the day's trade.
With billions of dollars in the system, successfully betting on a marginal move can be worth a lot of money.
Westpac had argued that “f*ck it” was a reference to the size of its risk exposure — around $30 million — if rates were unchanged and the bank did not hedge its exposure.
But the court was presented with a grammatical dilemma.
The Honourable Justice Jonathan Barry Rashleigh Beach of the Federal Court had to decide whether the use of “f*ck it” was a statement meaning Mr Roden had “no option” but to reduce his risk position by hedging his exposure to the RBA decision.
Otherwise, it considered “f*ck” it to be a transitive statement meaning that it did something to a direct object, in this case the BBSW.
“It has been used as both a transitive and intransitive verb. It has been used in an active sense and a passive sense,” Justice Barry wrote.
“It has been used in the past tense and the future tense. It has been used as an adjective.
“It has been used as a noun including as a verbal noun. Someone even tried to use it as an adverb.
“Sometimes disappointment or exasperation, sometimes pleasant surprise or even admiration.
“Sometimes criticism, sometimes positive reinforcement. Even more occasionally, it has been used to indelicately communicate the thought that caution was being thrown to the wind.
“Clearly, the ‘f***’ word and its derivatives are not terms of art in the finance industry.
“Westpac accepts that there is no discernible pause between, ‘I may as well’ and the second, ‘f*** it’, but it says that grammatically a pause is not necessarily required.
“The word has a chameleon character and Mr Roden was capable of using the term in almost every conceivable context.
“I disagree with Westpac's analysis. True it is that Mr Roden's use of the f-word and its derivatives was rich and diverse.
“He had a sense for every occasion.
“But it seems to me that on balance the f-word was being used here with its classic active transitivity.”
Justice Beach found Mr Roden had planned a “doable activity” to the BBSW.
But all the swearing may have been for nought, as Justice Beach found there was no evidence the attempt to rig the BBSW was even successful.
The Federal Court found Westpac had engaged in unconscionable conduct and breached the ASIC Act by attempting to manipulate the bank bill swap rate (BBSW) on four separate occasions.
Westpac was also found to have breached its financial services licensee obligations through inadequate procedures and training for its traders.