The Commonwealth Bank of Australia (ASX: CBA) share price is one to watch this morning after ASIC dropped a key investigation into the Aussie bank.
What did CBA announce?
CBA was notified that the Aussie corporate cop had dropped its investigation into the bank over its AUSTRAC scandal.
The proceedings, commenced by the Australian Transaction Reports and Analysis Centre (AUSTRAC) in August 2017, alleged money laundering breaches by the bank.
However, ASIC has concluded its investigations and will take no action against CBA or its directors.
That’s good news for the CBA share price which could be on the move in early trade following the update late yesterday.
What does this mean for the CBA share price?
The AUSTRAC scandal has weighed on CBA for three years now and this latest update does provide some closure.
I think it’s good news for the CBA share price with less uncertainty facing the bank and its shareholders.
On top of that, no penalties means investors aren’t worried about the potentially huge liability hanging over future profits. The bank settled the AUSTRAC case for a record $700 million penalty in June 2018.
In turn, I would expect the CBA share price to climb higher in early trade barring any broader negative market factors.
It also is a big tick for the bank as it continues to fight a class action from shareholders.
A group of investors are seeking damages due to alleged failure to disclose material information. That includes allegations CommBank failed to inform shareholders it was potentially exposed to AUSTRAC enforcement action.
How has CBA performed in 2020?
It’s been a rollercoaster of a year for the bank’s investors. The CBA share price is down 12.8% in 2020 with even bigger falls seen among its big four bank peers.
Meanwhile, the S&P/ASX 200 Index (ASX: XJO) is down 8.6% to 6,116.40 points.
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Motley Fool contributor Ken Hall has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.
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