Bombshell greets bank’s new boss

FOUR giant US pension funds are preparing to sue the Commonwealth Bank in a move dramatically widening the fallout from the money-laundering scandal that has engulfed the lender.

The pension funds — including the $US224 billion ($292 billion) California State Teachers Retirement System — are among “a significant number” of institutions planning to launch a fresh class action against the bank.

It marks a bombshell for new CBA chief Matt Comyn, who took the reins of Australia’s biggest bank yesterday.

The pension funds, which have assets totalling almost $US500 billion, have signed up for a case being prepared by boutique Australian litigation firm Phi Finney McDonald.

Legal experts say that if the class action is successful, the bank could face a hit of $100 million.

The class action will allege misleading or deceptive conduct by the CBA, along with breaches of continuous disclosure rules, over a period of more than three years.

It will centre on claims levelled at the bank last year by Australia’s anti-money-laundering and counter-terrorism-financing watchdog, the Australian Transaction Reports and Analysis Centre, or Austrac.

Austrac sued the CBA last August, saying the bank failed to report more than 50,000 suspicious transactions carried out through its ATM network.

CBA shares fell in the wake of that revelation, delivering a blow to the investors now lining up to sue the bank.

Then chief executive Ian Narev resigned as the scandal emerged and ballooned, although the bank has said his departure is unrelated. It would be the second class action the bank is facing over the Austrac allegations after law firm Maurice Blackburn filed an action last October.

But this lawsuit would significantly expand on the scope by covering a far broader period, meaning it is open to a many more investors.

The proposed Phi Finney McDonald class action is open to investors who bought CBA shares between June 16, 2014, and August 3, 2017 — about a year longer than the period covered by the Maurice Blackburn action.

Phi Finney McDonald director Odette McDonald said it was being driven by large scale “institutional investors”.

It is also open to retail, or “mum and dad”, investors who brought shares during the period in question.