Deutsche Bank AG allegedly misled investors about anti-money-laundering deficiencies and didn’t “properly monitor” customers it considered “high risk,” such as Jeffrey Epstein, investors said in New Jersey federal district court. The high-profile Deutsche Bank Jeffrey Epstein case was assigned to Judge Esther Salas just four days before her husband and son were shot.
- COURT: D.N.J.
- TRACK DOCKET: No. 20-cv-08978
- JUDGE: Esther Salas
- COMPANY INFO: Deutsche Bank AG
The bank didn’t tell investors it hadn’t fixed disclosure control problems and wasn’t keeping an appropriate eye on clients like convicted sex offender Epstein and two other banks involved in past financial misconduct scandals, investors alleged Wednesday in the U.S. District Court for the District of New Jersey.
Adding Epstein as a client in 2013 “was a critical mistake and should never have happened,” Deutsche Bank said in a July 7 message to staff. A bank spokesperson told Bloomberg News it had spent almost $1 billion to improve AML controls.
The bank’s share price fell 4.49% May 13 after news broke that the Federal Reserve had criticized its U.S. operations, including its AML and other control procedures, the investors said. The share price dropped 1.31% July 7 after New York’s state financial services department fined Deutsche Bank $150 million for “neglecting to flag numerous questionable transactions from accounts associated with Epstein,” Danske Estonia, and FBME Bank, the would-be class complaint said.
Deutsche Bank “signaled to investors” in 2017 that its then-new, now-departed general counsel would “further ensure” its “mitigation of its prior AML and other control function failures,” the complaint said. The bank touted its AML remediation efforts in subsequent Securities and Exchange Commission filings, the investors said.
Husband & son of Judge Esther Salas assigned Jeffrey Epstein case just 4 days back has been shot. With the dramatic arrest of his partner Ghislaine Maxwell, who possesses blackmail sex-tapes, a lot of prominent individuals are at risk of being exposed.https://t.co/951tAaQEfj
— GreatGameIndia (@GreatGameIndia) July 20, 2020
The bank warned investors of “generic, boilerplate” control risks but didn’t disclose “relationships with, and lax monitoring of, customers” like Epstein that Deutsche Bank had “itself deemed to be high risk,” the complaint said.
Deutsche Bank declined to comment on the new suit Thursday but said it had offered help to law enforcement immediately after Epstein’s arrest. “We have been fully transparent and have addressed these matters with our regulator, adjusted our risk tolerance and systematically tackled the issues,” a spokesperson told Bloomberg Law.
“Our reputation is our most valuable asset and we deeply regret our association with Epstein,” the Deutsche Bank spokesperson said.
Causes of Action: Exchange Act §10(b)—Using a manipulative or deceptive device or contrivance for a securities transaction in violation of SEC rules (15 U.S.C. §78j); SEC Rule 10b-5—Employing a device, scheme, or artifice to defraud, making untrue statements or omitting facts, or engaging in any act, practice, or course of business which operates as a fraud or deceit (17 C.F.R. §240.10b-5).
Relief: Damages with interest; attorneys’ fees; court costs.
Potential Class Size: Hundreds or thousands who acquired Deutsche Bank securities between Nov. 7, 2017, and July 6, 2020.
Attorneys: Pomerantz LLP represents the investors.
The case is Karimi v. Deutsche Bank AG, D.N.J., No. 20-cv-08978, complaint filed 7/15/20.
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