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.
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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.
