The Commonwealth Bank could face what legal firm Maurice Blackburn expects to be Australia’s largest ever shareholder class action over its alleged failure to inform investors of AUSTRAC’s accusations it breached money laundering and terrorism financing laws.
The proposed action will allege CBA breached its obligations by failing to inform the market about the money-laundering allegations when they were first made in 2015.
News of the allegations coinciding with a five per cent share price slump when it was finally announced last month.
Australia’s biggest-ever settlement in a class action was the $200 million won by Maurice Blackburn for shareholders of Centro Properties in 2012.
Mr Watson said he was confident the CBA class action would eclipse that settlement.
Maurice Blackburn said the Commonwealth Bank has around 800,000 shareholders who suffered a significant share price drop when AUSTRAC launched its Federal Court proceedings on Thursday August 3.
While Commonwealth Bank shares did not move much that day, they fell 3.9 per cent the day after, when traders had a chance to digest the seriousness of the breaches and the prospect of multi-billion-dollar penalties.
The $3.25-a-share decline on that Friday alone wiped around $5.6 billion off CBA’s market value, giving a sense of the potential scale of the lawsuit’s claim.
The New Daily contacted the Commonwealth Bank, but had yet to receive comment on the lawsuit by the time of publication.
The CBA’s money-laundering scandal has already claimed the scalp of its CEO, with the announcement that Ian Narev will retire by June 2018.
Mr Narev led CBA to a series of record annual profits, but was under intense pressure since AUSTRAC alleged the bank breached money laundering laws.
“In discussions with Ian, we have … agreed it is important for the business that we deal with the speculation and questions about his tenure,” chair Catherine Livingstone told the market on Monday morning.
Public pressure ramped up when he handed down a record full-year $9.8 billion profit the previous week. He has been at the bank’s helm since December 2011, through a storm of allegations and public hearings.
The bank’s board has itself come under pressure for its handling of money laundering case, which is at least the fifth to rock the bank in recent years. Some analysts have called for board renewal.
The board’s first attempt at damage control was to slash short-term bonuses for executives to zero for 2016-17, and to cut their own directors fees by 20 per cent in 2017-18.
– With agencies