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UPDATE 1-Australian regulator starts legal action against CBA over rate-rigging allegations

rate-rigging allegations@ (Adds regulator quote, background)

SYDNEY, Jan 30 (Reuters) - Australia's corporate regulator said on Tuesday it had started legal proceedings against Commonwealth Bank of Australia over rate-rigging allegations.

The Australian Securities and Investments Commission (ASIC) said the country's biggest bank was involved in manipulating the bank bill swap reference rate (BBSW) for profit on three occasions in 2012.

The BBSW is the primary interest rate benchmark used in Australian financial markets to price home loans, credit cards and other financial products.

"ASIC alleges it was unconscionable for CBA to trade in this way, and also to enter into products priced off the BBSW without disclosing its trading practices to its customers and counterparties," the regulator said in a statement on Tuesday after the market closed.

CBA did not immediately respond to a request seeking comment.

ASIC had also accused CBA's rivals - Australia and New Zealand Banking Group, National Australia Bank and Westpac Banking Corp - of rigging the same rate last year.

Westpac is defending itself against the allegations, while NAB and ANZ have settled the case. ($1 = 1.2390 Australian dollars) (Reporting by Jonathan Barrett and Paulina Duran in SYDNEY; Editing by Neil Fullick and Kim Coghill)