Class Action Launched On Behalf Of CBA Shareholders Over Money-Laundering Scandal

Tuesday 10 October 2017 @ 10.58 a.m. | Legal Research

On Monday, 9 October 2017, law firm Maurice Blackburn Lawyers (Maurice Blackburn) with support from litigation funder IMF Bentham, filed a shareholder class action in the Federal Court of Australia in Melbourne, on behalf of aggrieved Commonwealth Bank of Australia (CBA) investors who had suffered losses due to the share price falling following on the institution of legal proceedings by Australian Transaction Reports and Analysis Centre (AUSTRAC) against the CBA. The class action will represent all shareholders buying CBA shares between July 2015 and 3 August 2017.


The class action revolves around allegations made by AUSTRAC that the CBA allegedly failed to report cash transactions of $10,000 or more made through its intelligent deposit machines in time for assessment. AUSTRAC are alleging that the CBA contravened the Anti-Money Laundering and Counter-Terrorism Financing Act 2006 (Cth) over 53,000 times.

The National Head of Class Actions at Maurice Blackburn, Andrew Watson, is reported as saying that the CBA's share price dropped significantly after the AUSTRAC action was launched and that shareholders deserved compensation for their substantial losses. In the same report Mr Watson indicated that the case would be “. . . one of the largest shareholder cases in Australian legal history”.

The Key Allegation

According to a Maurice Blackburn spokesperson, the allegations are that:

“. . . CBA knew about serious instances of non-compliance with the AML/CTF Act and that its failure to disclose that information to the ASX amounts to misleading and deceptive conduct and a breach of its continuous disclosure obligations under the Corporations Act 2001 (Cth) and the ASX Listing Rules.”

The Effect On Shareholders

Following public disclosure of the AUSTRAC proceedings, the CBA’s share price fell from an intra-day high of $84.69 on 3 August 2017 to an opening price of $80.11 on 7 August 2017 (a fall of $4.58 or 5.4 per cent). A fall of 5 per cent plus being a very significant movement for an “otherwise stable stock”.

According to ABC News, the lead plaintiff William Phillips, for example, said he recently swapped $250,000 worth of Commonwealth Bank shares for ANZ Bank shares in response to the scandal. He said:

"Out of the shares that are in the interest period, I only had 718 shares that I purchased during that time, so I'm only a minnow in all this."

CBA Intends To Vigorously Defend Itself

In an ASX Announcement, the CBA Group has indicated that it intends to vigorously defend itself against the claim.

Class Action Not Counter-Productive

Mr Watson denied the move was counter-productive to shareholder profits, and is reported as saying that “any compensation resulting from the class action would be covered by the bank's insurance as well as top executives at the bank.”  This would include outgoing chief executive Ian Narev and the current board chairwoman Catherine Livingstone, who it is reported, have been singled out in the class action as “. . . knowing about the compliance issues but failing to act”.

The Federal Court Decision

It is anticipated that the Federal Court decision in the matter will be a while coming as the case is expected to be long and protracted, however, it will be awaited with much interest by those having shares in financial institutions.

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Commonwealth Bank shareholders launch class action over money-laundering scandal –

Commonwealth Bank of Australia class action –

CBA Group - ASX Announcement

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