The record fine agreed between Westpac and AUSTRAC last week could be key to a successful pay day for shareholders involved in a class action against the bank, a law firm involved in the case has said.
Legal firm Phi Finney McDonald filed its class action against the big four bank in the Federal Court in December, alleging Westpac had broken disclosure obligations to investors who acquired shares on the ASX and the New Zealand Stock Exchange, among other issues related to the AUSTRAC scandal.
Phi Finney McDonald principal lawyer and director Tim Finney told ifa sister title Investor Daily that the newly laid out admissions to breaches from Westpac, as shown in its ASX-lodged statement of agreed facts and admissions, have gone beyond previous statements from the big four bank, which could be key for the class action.
“In so far as Westpac has made those admissions, it narrows some of the issues in dispute in the class action, or we would expect it to,” Mr Finney said.
“We would not expect Westpac to admit something with AUSTRAC and then deny the same thing in the class action.
“Ideally, it suits parties, to say OK well, these are the areas where there is no longer any debate or dispute between us and then focus on the areas in the case where there are disputes or differences in view. Usually that’s when it can occur that parties can think about whether they’re in a position to settle one way or the other.”
The Phi Finney action was also brought on the behalf of investors who bought American Depository Receipts traded on the New York Stock Exchange, covering those who bought into the bank between 16 December 2013 to 19 November 2019.
It was instigated following Westpac’s share price plummeting as AUSTRAC launched its proceedings and headlines broke.
The firm has claimed the drop of the share price reflected shock and concern from the community, as well as Westpac shareholders, at the scale of contraventions and the potential link to child sex trafficking in the Philippines.
“The class action alleges, well firstly it had an obligation to apply the law, in relation to its counter-terror and anti-money laundering monitoring and reviewing activity, which AUSTRAC is [saying] it didn’t do, and Westpac has admitted it failed to do,” Mr Finney said.
“But it also had an obligation to disclose to prospective and actual shareholders in Westpac that these things were happening, that there was exposure to these risks.
“By failing to make that disclosure to investors, by saying on several occasions that Westpac was being compliant with its obligations, that caused the trading in Westpac shares to be conducted on an uninformed basis, that saw the share price to be higher than it would have been otherwise. People suffered losses because they weren’t able to invest in Westpac on an informed basis.”
The class action is being funded by Woodsford Litigation Funding.
Westpac is also facing a class action from US-based Rosen Law Firm over the AUSTRAC breaches, on the behalf of shareholders who bought securities in the group on the NYSE between 11 November 2015 and November 2019.
Another Australian firm, Johnson Winter and Slattery, had also launched a class action over disclosure around the major bank’s monitoring of financial crime and matters of the AUSTRAC proceedings in March, but it has since merged with the Phi Finney McDonald claim.
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