Lights, sirens, start your engines. The Commonwealth Bank ambulance chase is officially on!

It was only a matter of time, and what a short time it was. Plaintiff law firm Maurice Blackburn went public today with its (intended) class action lawsuit against the Commonwealth Bank.

Make no mistake, this is a whopping scandal whose ramifications will endure for years: 53,000 criminal breaches by the nation’s largest bank, a bank underpinned by a taxpayer guarantee.

There is however one significant issue with the putative CBA claim; it lacks materiality. Maurice Blackburn is getting its seat at the table, little more at this point. There is no affidavit.

Class action lawsuits require three things: a cause of action, a set of deep pockets to sue and a loss. Maurice Blackburn has the first two. The cause of action is the grand failure of bank management to prevent more than 53,000 criminal breaches, a failure of which executives and management were made aware well before the market was informed and the shares fell.

It has the second factor too. In the Commonwealth Bank, there could be no deeper pockets to sue. If a claim were to proceed and  if it were to stack up both in facts and in law, the bank would settle. These sharemarket plaintiff claims never run their course, they always settle before judgement. And in this instance, the bank would protect its management and board from the myriad embarrassments of document discovery and a very public court case.

In layman’s terms, management would use its shareholder funds to protect both their collective backsides and the backsides of the people who preside over their employment and their pay, the bank’s directors.

But the third factor in any successful class action claim is evidence of a loss; and this remains tenuous for now. The CBA share price did not crash in the wake of the AUSTRAC revelations. Unlike Centro or Dick Smith – the first a huge plaintiff settlement and the second a claim now afoot – the stock did not crash to zero.

Unlike Nufarm, Leighton Holdings, Oz Minerals or Aristocrat Leisure, there has been as yet no “material” drop in the share price, that is, a fall of more than 10 per cent or 15 per cent.

The CBA closing price on the stock market the day before the news was released was $83.97. It closed the following day at $80.72 but bounced to $81.52 after the weekend on the next trading day.

This demonstrates that – despite the gravity of the claims – the sharemarket did not deem any material damage to the bank. The stock bounced around until August 15 then fell again, closing at $78.32 today. But it fell in line with all the major banks.

So, while the damage is indeed in the billions of dollars, it is small cheese for CBA as the bank’s market capitalisation – or market value – is $136 billion.

The ASX deems “materiality” to be a 10 per cent or 15 per cent change in circumstances. This is 3 per cent change, a small fall in the share price which suggests the market considers the prospective damage from the AUSTRAC scandal to be immaterial.

With the passage of time, this may change. Damaging facts about the CBA facilitating terrorist financing and further money laundering for criminals may arise. At the moment though, Maurice Blackburn – in being first chasseur d’ambulance to arrive at the scene of the crash – is engaged in a public relations and marketing exercise.

If there is to be a claim, it wants in.

You have to hand it to la profession de poursuite des ambulances though, they are quick off the mark. If corporate regulators measure their legal response time in months and years, plaintiff lawyers measure it in days and weeks.

In its media blitz, Maurice Blackburn said it “looms as Australia’s largest ever class action”. This is stock in trade stuff. Its last class action against the bank was similarly framed the biggest, as are many class action lawsuits.

As they never run their full course through the courts – being more of a media pressure play to force a settlement – it is easy to make these sorts of claims.

The hard fact at the moment, is that damage to CBA shares is minimal. It is a telling reflection on the state of government and large financial institutions in Australia that such damning claims are brushed off by the share market. What the market is saying is: yes, this is a bad look for CBA but governments and regulators always mollycoddle the big banks and little will come of it.

Even though the collective fines for the AUSTRAC breaches are potentially in the billions ($18 million x 53,000 is a potential solvency event) no bank directors or management are ever likely to be charged and the eventual financial damage to the bank is unlikely to amount to much at all. That’s what a three per cent fall in the share prices suggests.

CBA’s market value stands at $135 billion. It’s share price is at the same level as it was in early June this year and late last year – before the news of a potential $1 trillion in fines.

Coming soon to michaelwest.com.au: another CBA insider sheds light on the scandal.

CBA says “software error”. Insider says “no one gave a rat’s arse”