Commonwealth Bank faces the threat of a new class action, this time against its share trading arm CommSec, as wealthy businessman Alistair Paton ramps up complaints including accusations of falsifying records and withholding information.
Mr Paton – a former Deutsche Bank employee and hospitality and property entrepreneur – told The Australian he was not backing down in his fight against CBA. His matter is currently being examined in detail by the Australian Financial Complaints Authority.
“It (CBA’s conduct) goes against all of the things they committed to after the banking royal commission, and with the CommSec overcharging case it seems like all of that happened at once,” he said.
“Most of (CommSec’s) customers are small customers, mums and dads, and when the bank throws the terms and conditions at them they accept it. They didn’t bank on the fact that I was not going to back down.”
Mr Paton’s matter against CBA goes back to a sudden suspension of his trading account late last year when the bank claimed he had not informed it of a change of directorship at his family trust.
The decision came without warning and led to hundreds of thousands of dollars in losses, given he was unable to trade in stocks, including Magellan Financial, Titan Minerals, Greenstone Resources and AMP.
The events set in motion a damaging chain of events that Mr Paton said shone a light on the inadequacy of CommSec’s systems and processes, and led to swelling losses and his claim of almost $2m against the bank, including interest.
The saga included a CBA customer relations manager telling Mr Paton he would investigate his file over a weekend while “drinking a bottle of scotch”.
Mr Paton has since conducted his own probe and discovered emails from 2018 showing the bank was aware of a change in directors, meaning in his view the account should not have been suspended. Documents sighted by The Australian show CBA had argued it was entitled to suspend the trading under the terms and conditions of its CommSec accounts.
A CommSec spokesman said: “The allegations have been thoroughly investigated and the parties are currently engaged in a confidential dispute resolution process in relation to this matter. We cannot comment on the matter any further.”
Among the transactions in question is a December trade of $227,500 for 250,000 AMP shares at 91c that was placed by Mr Paton at 1.29pm and then executed by the bank at 3.39pm, after the account was suspended at about 1.53pm.
At first, the bank said the trade was executed by Mr Paton and produced a computer-generated order ticket stating it was executed at 1.29pm. Mr Paton, using ASX records, showed that was not possible, which led the bank to withdraw that argument.
CBA admitted in a letter to AFCA in February that it had incorrectly told the agency an AMP order had been executed at 1.29pm on the day of the account’s suspension, when the order had only been placed. It has described the admission as a mistake.
To track down his orders and an exact audit of the CommSec account, Mr Paton had to obtain the information from outside the bank. “They withheld that information and then we obtained it from Iress without them knowing,” he said.