Looking to buy CBA shares? Here's the latest on the bank's class action

Will the CBA share price survive the company's time in court?

| More on:
Young professional person providing advise to older couple.

Image Source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Key points

  • The start of a class action lawsuit was heard on Monday, alleging CBA destroyed shareholder value by not reporting anti-money laundering breaches to government agencies
  • The CBA is denying that it had an obligation to report these events
  • A lawyer representing the plaintiffs claimed CBA made 53,506 contraventions of the Anti-Money Laundering and Counter-Terrorism Financing Act over three years

The Commonwealth Bank of Australia (ASX: CBA) share price closed higher today despite the company being accused of "law-breaking on a grand scale" in a class action lawsuit brought against it.

Shares of the big-four bank ended the day up 1.36% at $104.48 each.

CBA's share price performance might have been helped by the fact the S&P/ASX 200 Financials Index (ASX: XFJ) was also up for the day, by 1.02%.

Let's cover the highlights of the class action lawsuit against the ASX bank share.

The lawsuit

The Age reported that Maurice Blackburn and Phi Finney McDonald are suing CBA on behalf of affected shareholders after the bank agreed to pay a $700 million fine to settle a case with financial intelligence agency AUSTRAC in 2017.

The article notes the CBA share price dropped more than 5% amid AUSTRAC announcing it would pursue the bank for allegedly breaching money laundering laws, which saw criminals launder money through its ATMs.

The lawsuit claims CBA knew about these cash deposits being made at its ATMs but did not report them to the agency, nor the ASX, thus allegedly breaching its continuous disclosure obligations and consequently destroying shareholder value amid its share price dropping lower.

Meanwhile, the CBA is denying these claims, stating that it did not need to disclose these developments to the market as they were not price-sensitive.

A spokesperson for the bank said CBA vigorously denies the allegations and is defending the actions.

What happened this week

The first hearing for the case was held on Monday, with Maurice Blackburn's lawyer Jeremy Stoljar stating that CBA broke the Anti-Money Laundering and Counter-Terrorism Financing Act a massive number of times over three years.

Stoljar said:

The issue is, is this information of the kind that would or would be likely to influence investment decisions? Well, of course it would. Look at the sheer number of contraventions: 53,506 contraventions is, objectively, a very large number to say the least. It's law-breaking on a grand scale.

Stoljar continued:

It had continued for a long period of time indicating ongoing and systemic failing. It increased the cost of doing business involving remediation, persistent costs and potentially civil penalties.

Stoljar then showed the court an email chain of CBA executives stating that the breach needed to be taken "extremely seriously", and that its chief risk officer should be in contact with AUSTRAC to inform the agency of its breaches.

"This is absolutely at odds with the case CBA tries to put, which is that it's not material," Stoljar said.

The case continues. It is scheduled to last six weeks in Federal court.

Motley Fool contributor Matthew Farley has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

More on Bank Shares

Hand with AI in capital letters and AI-related digital icons.
Bank Shares

CBA shares lead the big 4 banks in using AI to cut costs

AI initiatives could transform the banking sector.

Read more »

A businessman presents a company annual report in front of a group seated at a table
Bank Shares

The future of the Big 4 banks: key takeaways from Macquarie's 2025 Banking Symposium

What lies ahead for the big 4 banks?

Read more »

A woman in a bright yellow jumper looks happily at her yellow piggy bank.
Bank Shares

CBA shares are down 9% from their peak. Is it time to buy?

CBA shares are getting cheaper, but are they cheap yet?

Read more »

A young woman sits with her hand to her chin staring off to the side thinking about her investments.
Bank Shares

The pros and cons of buying NAB shares in August

Is it a good time to invest in the major bank? Here’s my view.

Read more »

A young woman sits at her desk in deep contemplation with her hand to her chin while seriously considering information she is reading on her laptop.
Dividend Investing

Are CBA shares still a good buy today for passive income?

Looking to earn passive income from ASX dividend stocks? Here’s my take on CBA shares.

Read more »

Shocked office worker staring at computer screen with colleagues working in the background.
Bank Shares

The ASX bank share beating CBA in 2025

Many investors might not realise this smaller bank stock is leading the pack this year. 

Read more »

man thinking about whether to invest in bitcoin
Bank Shares

Here's what needs to happen for the CBA share price to try and reach $200

What could drive the CBA share price higher?

Read more »

A young woman sits at her desk in deep contemplation with her hand to her chin while seriously considering information she is reading on her laptop.
Bank Shares

Why now could be an opportune time to sell CBA shares

A leading expert offers his verdict on the outlook for CBA shares.

Read more »