Commonwealth Bank class action filed in Federal Court
COMMBANK CEO Ian Narev and chair Catherine Livingstone are among those named in a potential multi-million dollar class action the bank will fight.
COMMONWEALTH Bank CEO Ian Narev and chairman Catherine Livingstone are among those named in a potential multi-million dollar class action formally begun against the bank.
Law firm Maurice Blackburn has filed a statement of claim in the Federal Court in Victoria alleging that CBA had breached anti-money laundering and counter- terrorism funding laws and had failed to disclose the breaches to the investors despite knowing of them.
The class action names outgoing CEO Mr Narev and current chair Catherine Livingstone as being among those who allegedly knew of the bank’s non- compliance.
Maurice Blackburn says CBA has publicly confessed that its board was aware of the breaches in the second half of 2015, but the bank said nothing to the Australian share market until August 2017.
When CBA did reveal the issues to the share market this year, the result was a significant drop for an otherwise stable stock.
Maurice Blackburn’s national head of class actions, Andrew Watson, says thousands of retail shareholders have signed up to the class action as well as a very large number of institutional shareholders who suffered substantial losses. The class action has the potential to be the largest ever in Australia. Mr Watson says that people named in the claim are directors and officers of CBA who knew or should have known about the information that is the subject of the statement of claim.
“The most significant issue is that when (CBA) knew of the complete and systemic breakdown of its compliance system, it chose not to do anything about that and it chose not to disclose that to shareholders,” Mr Watson told reporters on Monday.
“The actual breaches which are at the heart of this thing, to be frank, I think they’re all pretty gobsmacking.” Mr Watson said Ian Narev’s apology on Friday last week was “a good thing”. “But in the end, what would have been a better thing is if the bank had behaved responsibly to shareholders in the first place,” Mr Watson said. In a brief statement on Monday, CBA said it “intends to vigorously defend” the claim.
On Friday, Mr Narev took the blame for the lender’s alleged breaches of anti- money laundering laws and apologised to retail shareholders. The lead plaintiff representing shareholders in the class action, William Phillips, said shareholders deserved to be properly informed before deciding where to invest their hard-earned money.
“I can’t tolerate being kept in the dark about what is really going on with the company – it is such a crucial obligation that any listed company has to disclose material information to the market,’ Mr Phillips said. Maurice Blackburn claims that CBA only made disclosures to shareholders in August this year after the financial intelligence and regulatory agency took civil action against the bank.
AUSTRAC is accusing CBA of more than 53,500 contraventions, most of them related to the bank’s use of intelligent deposit machines (IDMs) – ATMs that accept cash and cheque deposits which are immediately credited to the nominated recipient. AUSTRAC claims the bank failed to assess the money laundering and terror financing risk of the machines before they were rolled out, and to provide on time 53,506 reports of IDM transactions of $10,000 or more.
CommBank has vowed to fight the class action.