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Maurice Blackburn Lawyers and litigation funder IMF Bentham are calling on CBA’s 800,000 shareholders to enter into the “largest shareholder class action the country has seen”.
Following the news that Australia’s financial intelligence and regulatory agency, AUSTRAC, had initiated legal proceedings against the CBA alleging "serious and systemic non-compliance" with the Anti-Money Laundering and Counter-Terrorism Financing Act 2006 (AML/CTF Act), the two companies are proposing a class action against the bank on behalf of CBA shareholders.
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The proposed action against CBA will allege contraventions such as “engaging in misleading or deceptive conduct and/or breaching continuous disclosure obligations in relation to its non-compliance with the AML/CTF Act”, which IMF Bentham said is “information that a reasonable person would expect to have a material effect on the price or value of CBA shares”.
The litigation funder noted that shareholders were impacted by the news, highlighting that CBA shares were subject to a "significant movement" on the day of the AUSTRAC announcement.
As such, shareholders who purchased ordinary CBA shares between 17 August 2015 and 3 August 2017 (and still held some or all of those shares on until after 1pm on 3 August 2017) are now being asked to register their claims on the IMF website, while work is finalised by the solicitors and counsel on the Federal Court pleading to commence the class action.
The potential class action will be run on a no win – no fee basis, with all costs fully underwritten by IMF and Maurice Blackburn.
IMF has said that it will pay the other side's costs if the class action is unsuccessful and the claims are lost.
Failure to make proper market disclosure ‘adds insult to injury’
“AUSTRAC alleges that CBA contravened the AML/CTF Act on more than 53,000 occasions. The AUSTRAC allegations are extensive and it is astounding that the market would not be advised of such serious and repeated breaches as soon as the company became aware of them,” the national head of class actions at Maurice Blackburn, Andrew Watson, said.
“Instead, CBA has said that its board was aware of the breaches in the second half of 2015 but chose to say nothing to the ASX until 4 August 2017.
“As the largest company on the ASX, shareholders would expect CBA to take a leadership role in setting high standards of corporate conduct. The AUSTRAC allegations, if proven, show an abject failure of corporate governance and risk management. The failure to make proper disclosure to the market regarding those failures adds insult to injury for shareholders.
“Our investigations and analysis show that this drop was in the top 1 per cent of price movements that CBA experienced in the past five years, making it apparent that the news was of material significance to shareholders,” Mr Watson added.
Hugh McLernon, director of IMF Bentham, commented: “CBA is facing most serious allegations from AUSTRAC, and there are serious questions to be answered about what the company knew and when.”
CBA has said that it is "aware" that Maurice Blackburn and IMF Bentham were "investigating a potential shareholder class action" against them, but emphasised that the bank "has not been served with any legal proceedings".
"We will keep the market informed of developments," the bank said.
[Related: CBA confirms acquisition of major brokerage]
