Updated: May 14, 2019
Status: Ongoing Case
On March 22, 2019, Labaton Sucharow was appointed co-lead counsel in a securities class action lawsuit against Danske Bank A/S and certain of its former executives. The action asserts claims under Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, and SEC Rule 10b-5 promulgated thereunder, on behalf of all purchasers of Danske Bank American Depositary Receipts (“ADRs”) during the period from January 9, 2014 through April 29, 2019, inclusive (the “Class Period”).
The action alleges that Danske Bank, the largest financial institution in Denmark, concealed deficient anti-money laundering controls at its Estonia Branch, despite repeated warnings financial regulators and an internal whistleblower. It is reported that between 2008 and 2016, $230 billion was illegally laundered through Danske Bank’s Estonian Branch.
On November 9, 2006, Danske Bank announced its acquisition of Sampo Bank, Finland’s third largest bank with an extensive branch network, including a subsidiary in Estonia. In short order, the Estonian Branch generated outsized profits that were material to Danske Bank’s overall financial performance. In 2011, the Estonian Branch generated more than 10 percent of Danske Bank’s profits, despite the fact that it was comprised of just 14 branch offices out of a total of 627 branch offices company-wide.
Released on September 19, 2018, a report commissioned by the defendants and produced by the Bruun & Hjele law firm detailed the extent to which Danske Bank senior executives were aware of and failed to mitigate illegal money laundering at the Estonian Branch. Additionally, the Estonian Financial Supervisory Authority published a report in September 2014 which stated “Danske Bank systematically established business relationships with persons in whose activities it is possible to see the simplest and most common suspicious circumstances,” and that “[w]e have therefore systematically identified situations during our on-site inspection where Danske Bank’s system for monitoring transactions and person is effectively not working.”
According to the second amended complaint filed on May 14, 2019, the money laundering scheme is now being investigated by regulators in at least five countries and Danske Bank now faces billions of dollars in potential fines and penalties, with some analysts estimating that the fines could reach $8 billion. As the market has learned the extent of the company’s prior reliance on illicit profits and the resulting regulatory and reputational risks, the market price of Danske Bank ADRs has plummeted, harming shareholders.
The case is Plumbers & Steamfitters Local 773 Pension Fund v. Danske Bank A/S, No. 19-cv-00235. Labaton Sucharow represents co-lead plaintiff Boston Retirement System. The lead plaintiffs are Boston Retirement System, Teamsters Local 237 Additional Security Benefit Fund, Teamsters Local 237 Supplemental Fund for Housing Authority Employees, and Plumbers & Steamfitters Local 773 Pension Fund. The defendants are Danske Bank, and its former CEO Thomas Borgen, its former CFOs Henrick Ramlau-Hansen and Jacob Aarup-Andersen, and its former Chairman of the Board Ole Andersen.