The shareholder class action against the Commonwealth Bank of Australia (CBA) proposed in late August by Maurice Blackburn Lawyers and litigation funder IMF Bentham, will officially begin today, with a Statement of Claim (SoC) being filed in the Victorian Registry of the Federal Court of Australia.
Shareholders in Australia’s largest bank, have sent a clear signal that they won’t tolerate the corporate misconduct that has mired the bank in bad news in recent times, with thousands registering their interest in the class action, including hundreds of institutional investors.
The class action relates to CBA shareholders suffering from a significant share price drop on the back of 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.
The CBA has publicly confessed 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.
The SoC specifically names outgoing CEO Ian Narev, current Chair Catherine Livingstone and a host of other leaders within the bank including Chief Risk Officers Alden Toevs and David Cohen, and non‑executive directors Launa Inman and Sir David Higgins, among a raft of senior personnel who had early knowledge of the AUSTRAC issues which remained undisclosed until this year.
National Head of Class Actions at Maurice Blackburn, Andrew Watson, said that when CBA did reveal the issues to the market this year, the result was a significant drop for an otherwise stable stock.
“Our investigations and analysis show that this drop was in the top one percent of price movements that CBA experienced in the past five years, so clearly the news was of material significance to shareholders,” Mr Watson said.
“Investors would expect the CBA to take a leadership role in setting high standards of corporate conduct. Given the opposite appears to have happened here, shareholders have every right to seek accountability by exercising their legal rights in the most efficient and effective way possible – through the class actions regime.”
The case will be filed on an open class basis, meaning all affected shareholders will have their rights protected, and those that don’t wish to participate can opt out. It will be headed by lead plaintiff William Phillips, who is a long-time share market investor.
“I’m an accumulator of stock and I don’t sell unless something is really on the nose, but I recently sold more than $250,000 of CBA shares and reinvested with a different bank. I don’t want to invest in a company that puts profit before compliance – profits should follow compliance,” Mr Phillips said.
Hugh McLernon, Executive Director of IMF Bentham, said that after further consideration, the claim period has been extended back to 1 July 2015. Shareholders who purchased fully paid ordinary CBA shares between 1 July 2015 and 1:00pm on 3 August 2017, and still held relevant shares until after 1pm on 3 August 2017, can register their details to participate.
“Investors need to have faith in the integrity of the market for the market to properly function, and it is fair to expect that the biggest players on the market will live up to that expectation,” Mr McLernon said.