Wednesday, October 28, 2020

Judge dismisses lawsuit against Danske Bank over money laundering at its Estonian branch

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A U.S. judge on Monday dismissed a lawsuit accusing Denmark’s Danske Bank A/S and four former top executives of defrauding shareholders by hiding and failing to stop widespread money laundering at its former Estonian branch.

U.S. District Judge Valerie Caproni in Manhattan said shareholders in the proposed class action failed to sufficiently plead that the bank improperly reported revenue derived from money laundering or downplayed its supervision failures.

She also said the plaintiffs, led by four pension funds in New York and Massachusetts, failed to show that Danske acted recklessly or with conscious disregard that its statements were false and misleading.

“They allege in a conclusory way that defendants and employees of (Danske) received reports contradicting public statements, and fail to connect any of those reports to specific representations by specific persons,” Caproni wrote.

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The plaintiffs had sought damages for investors who lost money in Danske’s American depositary shares from Jan. 9, 2014 to April 29, 2019.

They sued four months after Danske said in September 2018 that an internal probe had uncovered about 200 billion euros ($236 billion) of payments made from 2007 to 2015 through its Estonian branch, with many payments appearing suspicious.

Lawyers for the plaintiffs did not immediately respond to requests for comment. Danske’s lawyers did not immediately respond to similar requests.

Claims against former Chief Executive Thomas Borgen, former Chairman Ole Andersen and two former chief financial officers were also dismissed.

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Authorities in several countries began investigating the suspicious payments made through the Estonian branch, and Estonia ordered Danske to exit the country. The bank has also faced investor litigation in Denmark.

The case is Plumbers & Steamfitters Local 773 Pension Fund vs Danske Bank A/S et al, U.S. District Court, Southern District of New York, No. 19-00235.

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