The proceeding, filed by law firm Phi Finney McDonald in the Federal Court of Australia, is on behalf of certain shareholders who acquired an interest in CBA’s shares between 16 June 2014 and 3 August 2017 (inclusive). Litigation funders Therium Australia Limited has agreed to fund the case.
The claim has been supported by institutional investors from Australia, North America and Europe, according to a statement by Phi Finney McDonald.
"It has been publicly backed by US pension funds, including the California State Teachers Retirement System, the Teachers Retirement System of Texas, the Massachusetts Pension Reserves Investment Management Board, and the Colorado Public Employees Retirement Association," said the statement.
The class action will seek to recover "some of the loss in share value suffered by investors because of CBA’s alleged failure to disclose material information to the market".
The big four bank has previously admitted to several contraventions of Australia’s Anti-Money Laundering and Counter-Terrorism Financing (AML/CTF) Act and agreed to pay a civil penalty of $700 million together with the $2.5 million costs of the Australian government’s financial intelligence agency, to resolve the civil proceedings commenced by the agency in the Federal Court of Australia on 3 August 2017.
While the civil case has been settled, this new class action (the latest of its kind brought by CBA shareholders) alleges that CBA breached its continuous disclosure obligations, and engaged in "misleading or deceptive conduct", by failing to inform investors prior to August 2017 that:
- it had failed to assess the risk of money laundering and terrorism financing activity in relation to the “intelligent” deposit machines (IDMs) between May 2012 and July 2015;'
- it had failed to monitor customer transactions, including potential money laundering and terrorism financing activity, on a significant number of accounts;
- it had not reported a significant number of threshold transactions to AUSTRAC on IDMs on time;
- it had failed to report a number of suspicious transactions to AUSTRAC, including some transactions that related to the financing of terrorism;
- its systems for identifying and managing money laundering and terrorism financing risks were deficient; and
- it had been contacted by AUSTRAC and other agencies about its compliance with the Act in respect of some of the above matters.
Phi Finney McDonald alleges that, due to the bank's failure to inform its investors of the above, CBA’s share price was artificially inflated.
The law firm has said that it is therefore seeking compensation for investors that purchased shares between 16 June 2014 to 3 August 2017 for "the loss and damage they suffered when acquiring CBA shares at an inflated price".
The major bank has confirmed today that it has been served with a class action proceeding filed by Phi Finney McDonald and "intends to vigorously defend this new claim".
