Noting the substantial factual overlap between the cases, Federal Court Justice Mark Moshinsky ruled Friday that ANZ faced a real risk of prejudice if it were forced to defend the Australian Securities and Investments Commission action before the conclusion of the criminal proceedings.

ASIC alleges ANZ breached its continuous disclosure obligations when it failed to alert the market to a $700 million bailout by the underwriters of the August 6, 2015 share placement. The failure materially prejudiced the interests of purchasers of ANZ shares by requiring them to pay a higher price than would have been payable, and depriving them of an opportunity to purchase shares at an “affordable (lower) price”, ASIC claims.

The criminal case, which followed an investigation by the Australian Competition and Consumer Commission, alleges the agreement by the underwriters — Deutsche Bank, Citigroup and JP Morgan — to pick up the shortfall in purchased shares amounted to a cartel in breach of the Competition and Consumer Act of 2010.

ANZ has been charged with four counts of being knowingly concerned in the contravention of a cartel offence provision. Deutsche Bank and Citigroup also face charges, as well as six bank executives, including ANZ group treasurer Rick Moscati.

Justice Moshinsky said he accepted the evidence of Allens partner Belinda Thompson, who is representing ANZ, that the bank would require Moscati’s assistance in properly preparing any defence to ASIC ‘s claims, and wouldn’t get it while Moscati faced a looming criminal trial.

“Mr Moscati is concerned that if he provides instructions or gives evidence, and especially if he is cross-examined, regarding matters in the civil proceeding, he would be providing instructions or evidence concerning matters relevant to the criminal charges that are the subject of the criminal proceedings and that this might prejudice his right to silence and privilege against self-incrimination,” Justice Moshinsky said.

“Mr Moscati is not willing to do so while the criminal proceedings remain on foot but would do so following the determination of the criminal proceedings.”

ANZ head of capital and structured finance John Needham, who played a role in the capital raising, was also unwilling to voluntarily assist the bank with its defence in the civil case pending the criminal matter, the court heard.

“In my view, the interests of justice require the civil proceeding to be stayed until the conclusion of the criminal proceedings, or further order,” Justice Moshinsky said.

“There is a real risk of prejudice to ANZ if the civil proceeding is not stayed because ANZ will be required to conduct its defence of the civil proceeding without the assistance of Mr Moscati and Mr Needham.”

The judge noted that the evidence of both executives was relevant to the allegations of material fact made in ASIC’s latest statement of claim. Their assistance, he said, would be “very importatant” in relation to allegations over the share placement, the underwriting agreement and the decision by the underwriters to allocate the ANZ shares.

“Mr Moscati’s and Mr Needham’s evidence is likely to be very important, if not critical, to ANZ’s defence of the civil proceeding. Thus, if ANZ were to decide not to compel Mr Moscati and Mr Needham to give evidence at trial, it would be deprived of evidence that is very important for its defence,” Justice Moshinsky said.

If ANZ were to compel the pair to give evidence at the civil trial, this would be likely to result in disclosure of evidence to be given in the bank’s defence of the criminal case, the judge added, which would “deprive ANZ of rights arising from the accusatorial process applying to criminal trials”.

“While ANZ as a corporation cannot claim the privilege against self-incrimination, it nevertheless has rights arising from the accusatorial process,” he said.

Publicity surrounding ASIC’s case also posed a risk of prejudicing ANZ’s position in the criminal case, the judge said.

“If the civil proceeding is not stayed, the two proceedings are likely to move in relatively close parallel. In the circumstances, there is a substantial risk that members of the jury in the criminal proceedings will have been, or be, exposed to and aware of publicity concerning the civil proceeding.”

ASIC alleges in its further amended statement of claim filed in April that Moscati, Needham and Deutsche Bank managing director Geoffrey Tarrant discussed two alternatives to “manage” the share placement situation on August 6, 2015 when it became clear the capital raising had failed to attract the anticipated level of interest from institutional investors: either relaunch the deal with lower-priced shares, or have the underwriters bail the bank out.

According to ASIC, Tarrant later advised the ANZ executives to “progress with the transaction”.

The underwriters allocated approximately 31 percent of the total placement shares, with Citigroup taking the largest proportion of that, at 40 percent, and Deutsche Bank and JPMorgan purchasing 30 percent each, according to ASIC.

The following day, ANZ announced that it had raised $2.5 billion in new equity capital through the placement of approximately 80.8 million ANZ ordinary shares at the price of $30.95 per share. The announcement, which was approved by two ANZ disclosure officers, Jill Campbell and Paul Edwards, did not disclose that the underwriters had acquired a big portion of the shares.

In addition to Moscati, the banking heads named in the cartel case are Citigroup’s former CEO Stephen Roberts, Deutsche Bank’s former CEO, Michael Ormaechea, Citigroup’s managing director John McLean, Citigroup’s global head of foreign exchange Itay Tuchman, and Deutsche Bank’s Michael Richardson.

JP Morgan does not face any charges and is believe to have earned immunity from prosecution by coming forward.

Allens is representing ANZ.