Commonwealth Bank Faces High Court Shareholder Damages Claim Over Delayed Disclosure of Compliance Breaches

Commonwealth Bank is defending itself in the High Court against a shareholder class action seeking compensation for losses allegedly caused by the bank's failure to disclose compliance breaches to the market in a timely manner. The bank was fined $700 million by financial intelligence agency AUSTRAC in 2018 for systemic failures in anti-money laundering and terror financing controls, including the late filing of 53,506 transactions of $10,000 or more and inadequate monitoring of 778,370 accounts between 2012 and 2015. Shareholders argue they purchased shares at inflated prices because the market was not informed of these breaches until AUSTRAC's 2017 media release, and they seek compensation for the difference between the price they paid and what they would have paid with full information. A Federal Court previously dismissed the damages claim on grounds that shareholders could not quantify their losses, but the High Court will now consider whether shareholders are entitled to recover based on a reasonable estimate without first proving the exact quantum. The bank attributes the breaches to IT coding errors that were promptly escalated and self-reported to AUSTRAC, and argues shareholders failed to prove what portion of the share price drop was attributable to the breaches rather than other market factors.