In this file photo taken on February 4, 2021 the logo of German giant Deutsche Bank is seen on their headquarters in Frankfurt. — AFP pic
Saturday, 24 Sep 2022 9:17 AM MYT
NEW YORK, Sept 24 — Deutsche Bank AG DBKGn.DE agreed to pay US$26.25 million (RM120.2 million) to settle a US shareholder lawsuit accusing the German bank of lax oversight while doing business with risky, ultra-rich clients like Jeffrey Epstein and Russian oligarchs.
The preliminary all-cash settlement filed on Friday in federal court in Manhattan requires approval by US District Judge Jed Rakoff, who in June allowed the proposed class action to proceed.
Shareholders led by Yun Wang, who traded Deutsche Bank stock in 2018 and 2020, claimed that the bank had known its know-your-customer and anti-money laundering controls were ineffective, and that its share price fell as problems emerged.
Deutsche Bank denied wrongdoing in agreeing to settle. Chief Executive Christian Sewing and his predecessor John Cryan are also defendants, and also denied wrongdoing.
A bank spokesman declined to comment. Sewing has since taking over in 2018 tried to show investors that Deutsche Bank has addressed its internal controls shortfalls.
The lawsuit faulted Deutsche Bank’s work with Epstein, the late financier and sex offender, and with Danske Bank’s DANSKE.CO Estonia branch, which become embroiled in a money laundering scandal.
New York’s Department of Financial Services fined Deutsche Bank US$150 million in July 2020 over its relationships with Epstein and Danske Estonia.
Shareholders also objected to Deutsche Bank’s taking on oligarchs like billionaire Roman Abramovich as clients, in what they called the bank’s “relentless pursuit of profits.”
Friday’s settlement covers Deutsche Bank investors in the United States from March 14, 2017 to Sept. 18, 2020.
Lawyers for the plaintiffs said the US$26.25 million payout is 49.4 per cent of the “likely recoverable” damages available, compared with a median 1.8 per cent in settled securities class actions in 2021.
The lawyers may seek up to one-third of the settlement fund for legal fees.
The case is Karimi v Deutsche Bank AG et al, US District Court, Southern District of New York, No. 22-02854. — Reuters