In a bracing example of how regulatory action can lead to class action in the courts, a New York law firm is accumulating plaintiffs for participation in a class action against Westpac, the Australian private banking giant.

The New York law firm of Bernstein Liebhard has announced that a class-action writ has been issued on behalf of investors that purchased or acquired the securities of Westpac Banking Corporation between 11 November 2015 and 19 November 2019. The lawsuit is taking place in the United States District Court for the District of Oregon and alleges that the Australian banking giant broke the Securities Exchange Act 1934.

The complaint alleges that, throughout that period, defendants made false and misleading statements and failed to disclose adverse facts about the bank’s business, operations and prospects. Contrary to Australian law, so the argument goes, the bank failed to report more than 19.5 million international funds transfer instructions to AUSTRAC, Australia’s anti-money-laundering regulator. It also was reputedly not good enough at monitoring and assessing the risk of money laundering taking place as money moved into and out of Australia, not passing on requisite information about the sources of funds to other banks in the transfer chain. Despite being aware of the high risks involved, the lawsuit says that the bank was not 'duly diligent' about various transactions in South East Asia and the Philippines that might have helped someone exploit children. The writ also accuse the bank of not identifying, mitigating and managing risks related to money laundering and terrorist finance. As a result, the law firm argues, defendants’ statements about the bank's business, operations and prospects were materially false and misleading and/or lacked a reasonable basis at all relevant times.

On November 19, 2019, after market hours, AUSTRAC embarked on a civil action in Australia, alleging that the bank broke Australia's AML laws more than 23 million times. Westpac reportedly feild to report more than 19.5 million international fund transfers, did not perform EDD or "enhanced due diligence" on correspondent banks in highly risky jurisdictions and might have provided services used in the exploitation of children in South East Asia and the Phillipines. On this news, Westpac’s American Depositary Receipts (ADRs) fell US$1.25 per share over the next three trading days or approximately 7.13% to close at US$16.67 per ADR on 22 November 2019. This is the basis of the claim.

On its website Bernstein Liebhard states: "If you wish to serve as lead plaintiff, you must move the Court no later than March 30 2020. A lead plaintiff is a representative party acting on behalf of other class members in directing the litigation. Your ability to share in any recovery doesn’t require that you serve as lead plaintiff. If you choose to take no action, you may remain an absent class member."