A massive class action potentially worth "hundreds of millions of dollars" has been launched against the Commonwealth Bank (CBA) for a drop in its share price following accusations it breached anti-money-laundering and terrorism finance laws.
Law firm Maurice Blackburn and litigation funder IMF Bentham today filed a statement of claim in the Federal Court in Melbourne saying the CBA board knew of potential breaches in the second half of 2015 and failed to inform shareholders for two years.
The Australian Transaction Reports and Analysis Centre (AUSTRAC) has accused the bank of failing to comply with the laws on almost 54,000 occasions between November 2012 and September 2015.
The CBA allegedly failed to report cash transactions of $10,000 or more made through its intelligent deposit machines to AUSTRAC in time for assessment.
Andrew Watson, the national head of class actions at Maurice Blackburn, said CBA's share price dropped significantly after the AUSTRAC action was launched and shareholders deserved compensation for substantial losses.
The class action will be on behalf of all shareholders who bought CBA shares between July 2015 and August 3, 2017.
Mr Watson said the case would be one of the largest shareholder cases in Australian legal history.
He said there had already been an "overwhelming" interest in the class action from thousands of retail and institutional shareholders.
"It's a very large number of shares that would have been acquired during that period."
Top executives at the bank, including outgoing chief executive Ian Narev and current board chairwoman Catherine Livingstone, have been singled out in the class action as knowing about the compliance issues but failing to act.
"The people who are named in the statement of claim are the directors and officers whom we say knew or should have known … or ought to have known based on their roles and responsibilities," Mr Watson said.
"That is not to say that they are necessarily the only people in the bank who were aware of these things."
He denied the move was counterproductive to shareholder profits, saying any compensation resulting from the class action would be covered by the bank's insurance.
Lead plaintiff William Phillips said he recently swapped $250,000 worth of Commonwealth Bank shares for ANZ Bank shares in response to the scandal.
"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," he said.
Shareholders who do not wish to take part can opt out.
In a brief statement, the Commonwealth Bank said it planned to vigorously defend itself against the class action.
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