Westpac’s Peter King and Brian Hartzer accused in US class action
It’s the second class action lawsuit launched against Westpac over the child exploitation scandal.
Former Westpac chief executive Brian Hartzer and outgoing financial officer Peter King have been accused in a US class action of “attesting to the accuracy” of “materially false and misleading statements” in contravention of US federal securities laws.
The accusations are contained in the second class action lawsuit launched against Westpac over the child exploitation scandal, after prominent litigator US-based Rosen Law Firm announced it had filed a claim against the bank on behalf of investors who purchased shares on the New York Stock Exchange.
The claim has been filed in the US District Court for the Eastern District of New York and former chief executive Brian Hartzer and outgoing interim chief Peter King are both named as defendants.
Rosen Law Firm said in a statement it was seeking to recover damages under US federal securities laws and called on investors who bought shares between 11 November 2015 and 19 November 2019 to join the class action.
“A class action lawsuit has already been filed,” a statement from Rosen partner Phillip Kim said.
Westpac has been accused by Rosen of making false or misleading statements and failing to report 19.5 million international transactions to the local anti-money laundering regulator Austrac, failing to monitor money laundering risks, failing to pass on information to correspondent banks, failing to carry out due diligence on money destined for Southeast Asia and the Philippines, running an “inadequate” anti-money laundering program, and making “materially false” statements about its business, operations and prospects.
In its claim, Rosen said Mr Hartzer and Mr King were “aware of or recklessly disregarded the fact that the false and misleading statements were being issued concerning the company” and “approved or ratified these statements in violation of the federal securities laws”.
The firm claims Mr Hartzer and Mr King were “directly or indirectly involved in drafting, producing, reviewing and/or disseminating the false and misleading statements” and involved in the “oversight or implementation of the company’s internal controls”.
It is also claimed each “directly participated in the management” of Westpac, each was “directly involved in the day to day operations of the company at the highest levels” and were “privy to confidential proprietary information” concerning the bank.
Rosen claims Mr Hartzer and Mr King attested several statements issued to the Securities and Exchange Commission that stated Westpac’s compliance with anti-money laundering laws in Australia and the US between 2015 and 2019.
After Austrac lodged its claim against the bank on November 20, Westpac’s US-listed shares fell more than 7 per cent over three days, “damaging investors”, Rosen claims.
Rosen also cites in its claim revelations by The Australian that an “internal Westpac breach system memo shows the bank knew the ‘end-to-end’ process for reporting international transfers to Austrac was not ‘clearly understood’ by high-level staffers as far back as mid-2017”.
As a result of Westpac’s, Mr Hartzer’s and Mr King’s “wrongful acts and omissions”, Rosen claims, shareholders suffered “significant losses and damages’’.
Westpac is expected to face a fine of close to $1bn after failing to properly monitor billions of dollars in international money transfers, known as IFTIs, or report those transactions to regulators
The banking and corporate regulators are also conducting separate inquiries into the alleged legal breaches at Westpac, with the Australian Prudential Regulation Authority already imposing an additional $500m capital charge on the bank.
Phi Finney McDonald filed its action against Westpac in the Federal Court in December and the law firm’s director Tim Finney said the group had been approached by institutional investors “across the world” who were outraged by the millions of allegations of anti-money laundering breaches facing the bank.
“We have not been served with the claim so are not in a position to comment,” a Westpac spokeswoman said.
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