COMMBANK FACES 'VERY LARGE' CLASS ACTION LAW SUIT OVER MONEY LAUNDERING SCANDAL

Written on the 23 August 2017 by Ben Hall

COMMBANK FACES 'VERY LARGE' CLASS ACTION LAW SUIT OVER MONEY LAUNDERING SCANDAL

THE Commonwealth Bank is facing a potential massive class action from shareholders because of a big drop in its share price following allegations it was involved in money laundering operations.

Law firm Maurice Blackburn and litigation funder IMF Bentham are running the class action which will seek to recover compensation for investors when CBA's share price dropped on the news that the Australian Transaction Reports and Analysis Centre (AUSTRAC) filed its court case against the bank.

Earlier this month AUSTRAC, which is the federal government's financial crime agency, filed its claim alleging CBA failed to notify it of more than 53,000 transactions at its network of so-called 'intelligent' automated cash deposit machines (IDMs), with a total transaction value of $624 million.

IDMs can accept up to 200 notes per deposit or up to $20,000 per cash transaction with no limit on the number of transactions per day and it's alleged the breaches occurred unchecked for three years between 2012 and 2015.

Maurice Blackburn says the basis of the class action is that CBA knew about the AUSTRAC investigation but failed to tell the market. The law firm says the claim against CBA will be "very large" and could involve up to 800,000 shareholders.

The class action is centred around the share price drop from an intra-day high of $84.69 on 3 August to an opening price of $80.11 on 7 August, which represents a fall of $4.58 or 5.4 per cent, which the law firm says is "one of the biggest single price movements in CBA's recent history", wiping $8 billion off the value of the company.

"Our investigations and analysis show that this drop was in the top one per cent of price movements that CBA experienced in the past five years, making it apparent that the news was of material significance to shareholders," says Maurice Blackburn's head of class actions, Andrew Watson in a statement.

Watson told a media conference in Sydney that the Commonwealth Bank had known of the AUSTRAC investigation for two years before they told shareholders.

"This is going to be large. On any view, it's going to be a very large claim," Watson says.

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Business News Australia

 
Author: Ben Hall

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