A shareholder class action case against the Commonwealth Bank of Australia has been dismissed by an Australian court, in a decision that brings significant impact on the global litigation funder Omni Bridgeway. According to a report by Bloomberg Law, Omni Bridgeway invested $6.3 million into the case and sold a 20% interest in it for $4.9 million in June 2022, resulting in a net cash loss of $1.4 million. Trading of Omni Bridgeway was halted ahead of the decision, with stocks closing at 0.90, a 52-week low.
The case against Commonwealth Bank of Australia was in relation to a breach of continuous disclosure to investors. Launched by Australian law firm Maurice Blackburn, the class action focused on the bank’s lack of information over a three-year period concerning its anti-money laundering and counter-terrorism financing compliance violations.
These accusations against the bank surfaced after a 2017 lawsuit by the regulator AUSTRAC. The regulator claimed that the bank violated money laundering laws when it allowed large cash deposits through its ATMs. This case was settled for $700 million.
Justice David Yates of the Federal Court of Australia concluded the recent trial in favor of Commonwealth Bank of Australia. His ruling hinged on the judgement that a reasonable person would not expect such a lack of information to materially affect the price or value of the bank’s shares, if it were to be available to the general public at the time.
In response to the case dismissal, Omni Bridgeway stated that the legal team of the applicant is “reviewing the judgment and assessing the prospects of an appeal”. Meanwhile, the company has assured that there shall be no cash impact due to this trial’s adverse costs, attributing this to an insurance policy it carries for its funds. In Australia, by norm, the unsuccessful party in a trial is to cover the legal costs incurred by the successful one. This litigation funder’s statement thus downplays the possible further financial implications it could bear.
The verdict implies that the case in question is Zonia Holdings Pty Ltd v Commonwealth Bank of Australia Limited (No 5) [2024] FCA 477.