Danish lender Danske Bank and some of its ex-executives have reportedly beat an appeal by New York shareholders who claimed of being defrauded by the bank as a result of money laundering at its former Estonian branch.
Four pension funds in New York and Massachusetts led the proposed class action, reported Reuters.
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They sought damages for investors who lost capital in the bank’s American depositary shares between 9 January 2014 and 29 April 2019.
However, Circuit Judge Dennis Jacobs said that allegations of the bank improperly reporting revenue from money laundering, mismanaging whistleblower complaints and downplaying supervision lapses did not support the fraud claims.
While ruling in favour of the bank, the 2nd U.S. Circuit Court of Appeals said that “money-laundering at a single branch in Estonia cannot alone establish that Danske Bank itself carried out a deceptive scheme to defraud investors.”
Claims against the bank’s ex-CEO Thomas Borgen, the estate of former Chairman Ole Andersen, and two former CFOs were dropped, according to the news agency.
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By GlobalDataThe decision upholds a ruling by U.S. District Judge Valerie Caproni in Manhattan made in August last year.
The lawsuit started after the bank was caught up in a money laundering scandal, with an internal investigation in September 2018 revealing the same.
According to the probe, around $235bn (€200bn) in payments flowed through the bank’s Estonian branch between 2007 and 2015.
The bank eventually came under the lens in several countries and was asked to withdraw from Estonia.
It also decided to close down its operations in Russia and all Baltic States after the scandal.
Last month, Danske Bank announced plans to close four branches in Northern Ireland later this year.
Among the branches to close are in Ballygawley, Hillsborough, Mallusk and at University Road in Belfast, which will be shuttered on 22 October.
