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Westpac woes far from over

By Lachlan Maddock
 — 1 minute read

It’s lawyers at 20 paces as the bank faces down three regulators and two class action lawsuits, with the threat of even more litigation coming down the pipeline.

Westpac has found itself facing a second class action, this time from US-based Rosen Law Firm. The firm’s claim names former CEO Brian Hartzer and current CEO Peter King as defendants, alleging that the two executives misled shareholders by failing to disclose lapses in their anti-money laundering/counter-terrorism financing (AML/CTF) controls. 

The lawsuit represents purchasers of Westpac’s shares on the New York Stock Exchange between 11 November 2015 and 19 November 2019, and seeks an undisclosed amount of money. Westpac acknowledged the lawsuit in a statement to the ASX, saying that it would be defending the claim and noting that “other similar lawsuits may be filed”. 

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The bank is now on the wrong end of two class action lawsuits. In December 2019, Phi Finney McDonald announced it would be launching a claim on behalf of shareholders who bought Westpac shares between 16 December 2013 and 19 November 2019, alleging that the bank engaged in misleading and deceptive conduct by representing to the market that it was complying properly with the AML/CTF Act

At the same time, the regulators are also circling. APRA has signalled that it will use the Banking Executive Accountability Regime (BEAR) to investigate whether high-level indifference led to the breaches, while AUSTRAC is likely to extract a fine in the multiple hundreds of billions and ASIC is looking into the bank’s awkwardly timed $2.5 billion capital rise. 

The raft of litigation will be the first test of the bank’s new chairman, John McFarlane, an international banker with more than 40 years’ experience. 

“I’m passionate about the Australian banking sector, and I’m excited by the challenge of returning Westpac to its place as a leading global bank, following recent events,” Mr McFarlane said.

“Nevertheless, I’m sufficiently battle-hardened to realise things can be tougher than you think and that in banking, nothing is ever certain.”

 

Westpac woes far from over

It’s lawyers at 20 paces as the bank faces down three regulators and two class action lawsuits, with the threat of even more litigation coming down the pipeline.

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