Omni Bridgeway Takes Hit From Australian Bank Suit Dismissal

A shareholder class action against the Commonwealth Bank of Australia that was partially funded by Omni Bridgeway was dismissed on Friday.

The global funder invested $6.3 million into the claims and sold a 20% interest for $4.9 million in June 2022, resulting in a net $1.4 million cash loss. Omni Bridgeway is publicly traded on the Australia Stock Exchange and halted trading ahead of the decision. The stock on Thursday closed at 0.90, sinking to a 52-week low.

In 2017, regulator AUSTRAC filed a lawsuit against the bank alleging it breached money laundering laws after allowing large cash deposits through its ATMs. The case settled for $700 million.

Australian law firm Maurice Blackburn launched a class action that focused on CBA breaching its obligations of continuous disclosure to investors by not providing information over a three-year period relating to its violations of anti-money laundering and counter-terrorism financing compliance.

Justice David Yates of the Federal Court of Australia ruled in favor of CBA and dismissed the case Friday. He wrote in his judgment that a reasonable person would not expect this information to have a material effect on the price or value of CBA shares if it were generally available at the time.

In a press release following the dismissal, Omni Bridgeway said, “the applicant’s legal team is reviewing the Judgment and assessing the prospects of an appeal.” Maurice Blackburn did not immediately reply to a request for comment.

The company said there won’t be a cash impact from adverse costs because of an insurance policy carried by its funds. Typically in Australian litigation, the loser pays the successful party’s legal costs.

The case is Zonia Holdings Pty Ltd v Commonwealth Bank of Australia Limited (No 5) [2024] FCA 477.