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Danske Bank, ex-CEO are sued in U.S. over money laundering scandal

Reuters  |  NEW YORK 

By Jonathan Stempel

(Reuters) - A/S and four former top executives were sued on Wednesday by a U.S. shareholder that accused Denmark's largest of defrauding investors and inflating its share price by hiding and failing to stop widespread at its Estonian branch.

The complaint was filed in the in Manhattan by a that is seeking class-action status and damages for investors in Danske's American depositary shares from Jan. 9, 2014 to Oct. 23, 2018.

Danske was accused of being "intentionally less than forthcoming" to Danish regulators even after a whistleblower alerted the Copenhagen-based to suspected money laundering, while overstating its legitimate profitability and ability to thwart misconduct.

The bank did not immediately respond to requests for comment after market hours in on behalf of the defendants, who include former Thomas Borgen, former Ole Andersen, and two former

resigned last Sept. 19, when Danske said an internal probe had uncovered about 200 billion euros (US$231 billion) of payments made from 2007 to 2015 through its small Estonian branch, and that many payments appeared suspicious.

Andersen was replaced in December.

Authorities in Denmark, Estonia, Great Britain and the are investigating the payments, including in a criminal probe by the Danske has said it has been cooperating with authorities.

The Sept. 19 report came one year after Danske expanded its probe into the Estonian branch, following what it called "a root cause analysis concluding that several major deficiencies led to the branch not being sufficiently effective in preventing it from potentially being used for "

According to the complaint, the market value of Danske's ADRs fell by more than $2.54 billion as investors learned of the full scope of the scandal.

It is common for shareholders to sue companies in the after what they consider unexpected share price declines.

The lawsuit is led by the Plumbers & of Glens Falls, Its firm specializes in

The case is Plumbers & vs A/S et al, U.S. District Court, Southern District of New York, No. 19-00235.

(Reporting by in New York; Editing by Tom Brown)

(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)

First Published: Thu, January 10 2019. 01:30 IST
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