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NY Judge dismisses lawsuit against Danske Bank over Estonia branch

By Elizabeth Hearst

A US federal judge has dismissed a lawsuit accusing Danske Bank of defrauding shareholders by failing to stop widespread money laundering at the bank’s Estonian branch. 

The class action lawsuit was dismissed by US District Judge Valerie Caproni in Manhattan, on the basis that the shareholders failed to sufficiently plead that the bank failed to report the proceeds of money laundering and downplayed its supervision failures, according to Reuters.

The lawsuit was brought by four pension funds in New York and Massachusetts, with Caproni ruling that the plaintiffs had failed to show that Danish bank had acted recklessly or was cognisant that the statements they provided were false. 

“They allege… that defendants and employees of (Danske) received reports contradicting public statements, and fail to connect any of those reports to specific representations by specific persons,” according to Caproni. 

The plaintiffs were seeking damages for investors who had lost money in Danske’s American depositary shares during a five-year period between 2014 and 2019. The plaintiffs brought the action against the bank four months after Danske admitted in 2018 that an internal investigation uncovered discrepancies in its Estonian branch. 

The internal probe by Danske found that about €200 Billion in payments, some of which had been flagged as suspicious, were made from 2007 to 2015 through its Estonian branch. 

Authorities in several countries have investigated the transactions made through the branch, with the Estonian government ordering Danske to leave the Estonian market. 

Claims against the bank’s former Chief Executive Thomas Borgen, former Chairman Ole Andersen and two former chief financial officers were dismissed.

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