Troubled Australian Bank Faces Potential Backlash From Shareholders

Josh O'Neill

24 August 2017

The is facing a potential class action from its shareholders after a money laundering probe by Australia's financial crime watchdog triggered a recent slide in the bank's share price.

The action, should it proceed, will seek compensation for shareholders for the decline in CBA's share price when AUSTRAC filed a money laundering case against the bank earlier this month.

Maurice Blackburn, the law firm running the case against CBA, said around 800,000 of the bank's shareholders suffered a significant price drop when the Federal Court proceedings began on 3 August.

The day after proceedings were kick-started, CBA's share price fell 3.9 per cent, or A$3.25 ($2.56) per share, wiping around A$5.6 billion off its market value.

But Maurice Blackburn will attempt to base its claim on a A$4.58 share price drop between CBA's intraday high of A$84.69 to a low of A$80.11 on 7 August, media reports say. This would total shareholder losses of A$7.8 billion.

"Our investigations and analysis show that this drop was in the top 1 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," Andrew Watson, Maurice Blackburn's head of class actions, reportedly said in a statement.

He was also reportedly scathing of CBA's board for “sitting on” knowledge of AUSTRAC's investigation for around two years before disclosing it to shareholders.

"It appears that the CBA completely failed to honour its obligations of transparency and openness to its shareholders," he said. "That they were treated with such blatant and cavalier disregard by Australia's largest listed entity is simply gobsmacking."