A New York pension fund is suing Danske Bank and four former executives, accusing the bank of lying to investors and boosting its share price while knowingly concealing and allowing rampant money laundering to continue in the bank’s Estonian branch.
Reuters reported that on Wednesday (Jan. 9), the complaint was filed in Manhattan in the U.S. District Court. The pension fund wants a class-action status on the lawsuit and damages for participants in Danske’s American depositary shares from early 2014 to late 2018.
The suit accuses Denmark’s largest bank of being “intentionally less than forthcoming” to the country’s regulators, despite a whistleblower making the issue known. It also over inflated profits and wasn’t honest about its ability to stop the malfeasance, the suit states.
The defendants include ex-Chief Executive Thomas Borgen, ex-Chairman Ole Andersen, and two former highly ranked financial officers.
Borgen resigned in September of last year when an internal probe found out 200 billion euros ($231 billion) in suspicious payments were made through the Estonian branch from ‘07 to ‘15.
The bank is currently embroiled in several investigations from Great Britain to the United States to Denmark and Estonia. Danske says it’s cooperating.
The internal report in September came out a year after the investigation of the Estonian branch. The report said “several major deficiencies led to the branch not being sufficiently effective in preventing it from potentially being used for money laundering.”
The lawsuit said that the market value of Danske’s American depositary receipts (ADRs) dropped by $2.54 billion when investors became aware of the breadth of the scandal.
The Plumbers & Steamfitters Local 773 Pension Fund of Glens Falls, New York is leading the lawsuit, and the case will be handled by law firm Robbins Geller Rudman & Dowd, which specializes in securities fraud.
Over the course of 2018, Danske bank saw the value of its shares drop by 50 percent.