The bad news keeps on coming for Commonwealth Bank of Australia.
Maurice Blackburn Lawyers have partnered with Australia’s largest litigation funder, IMF Bentham, on behalf of Commonwealth Bank’s (CBA) near 800,000 shareholders against CBA.
The class action comes as shareholders suffered a significant share price drop following a shocking lawsuit against the big four bank.
Early in August, AUSTRAC announced civil penalty proceedings against CBA over 53,000 acts of “serious and systemic non-compliance with the Anti-Money Laundering and Counter-Terrorism Financing Act 2006 (AML/CTF Act)”.
To make matters worse, only a week later CBA announced they would have to refund around $10 million to tens of thousands of Aussies after selling unsuitable consumer credit insurance.
National Head of Class Actions at Maurice Blackburn, Andrew Watson, believes that given how extensive the AUSTRAC allegations are, “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”.
“Instead the 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 [we] would expect the 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,” said Mr Watson.
CBA shares dropped from an intra-day high of $84.69 on 3 August 2017 to an opening price of $80.11 on 7 August 2017, following the AUSTRAC legal proceedings becoming public.
“Our investigations and analysis show that this drop was in the top one 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,” said Mr Watson.
The Commonwealth Bank responded to the potential lawsuit in a media release, stating that it was “aware that Maurice Blackburn and IMF Bentham announced today that they are investigating a potential shareholder class action against Commonwealth Bank”.
“Commonwealth Bank has not been served with any legal proceedings.
“We will keep the market informed of developments,” concluded the three-line statement.