News: WBC UPDATE 1-Australian regulator files insider trading lawsuit against Westpac

(Adds details of lawsuit, background on prior case)

May 5 (Reuters) - Australia's corporate watchdog launched an insider trading lawsuit on Wednesday against Westpac Banking Corp (WBC) , alleging that the bank's traders bought and sold derivative products ahead of a $12 billion interest rate swap deal in 2016.

The Australian Securities and Investments Commission (ASIC) said that on Oct. 20, 2016, Westpac "knew" or "believed" it would be selected by a consortium of AustralianSuper and a group of IFM entities to execute the interest rate swap transaction that morning, information that was not public.

Earlier that morning, the consortium had signed an agreement with the New South Wales government to buy the majority of electricity distributor Ausgrid.

"Westpac's traders acquired and disposed of interest rate derivative products in order to pre-position Westpac in anticipation of the execution of the swap transaction," the ASIC said.

The regulator added that the interest rate swap transaction with Westpac occurred later at 10:27 a.m. local time and the trades by Westpac, Australia's second largest bank, had the potential to negatively impact the price of the swap transaction for the consortium.

Westpac, in a statement soon after the ASIC announcement, said it was considering its position and takes "these allegations very seriously."

In 2018, a court in Australia ordered Westpac to pay A$3.3 million ($2.55 million) for its involvement in setting Bank Bill Swap rate (BBSW) in 2010.

ASIC said it is seeking pecuniary penalties, without elaborating on financial details.

($1 = 1.2957 Australian dollars)