In February 2023, Pomerantz, as sole lead counsel, received final court approval of a $26.25 million settlement with Deutsche Bank AG in a securities class action stemming from the Bank’s failure to properly adhere to its own due diligence protocols.
The recovery for investors represents approximately 50% of the likely recoverable damages, an exceptionally high percentage for securities class actions.
The complaint, filed in 2020, alleges that Deutsche Bank made materially false and misleading statements about its anti-money-laundering (“AML”) deficiencies and did not properly monitor customers it considered high risk, such as financier and accused sex offender Jeffrey Epstein. For example, defendants repeatedly assured investors that Deutsche Bank had “developed effective procedures for assessing clients (Know Your Customer or KYC) and a process for accepting new clients in order to facilitate comprehensive compliance,” and insisted that “[o]ur KYC procedures start with intensive checks before accepting a client and continue in the form of regular reviews” and included “[s]pecial safeguards . . . implemented for… politically exposed persons [“PEPs”].”
In truth, however, the Bank repeatedly exempted high-net-worth individuals and PEPs from meaningful due diligence, enabling their criminal activities through the use of the Bank’s facilities. Deutsche Bank continued “business as usual” with Jeffrey Epstein even after learning that 40 underage girls had come forward with testimony that he had sexually assaulted them. The Bank also boarded, retained, and serviced oligarchs and other clients reportedly engaged in criminal activities, including terrorism.
In 2020, the media began to cover Deutsche Bank’s internal problems, including news of a harshly critical Federal Reserve report on the bank’s AML and control issues, a $150 million fine from New York State’s financial regulator for AML misdeeds, and its Epstein relationship. According to a Bloomberg news article on July 16, 2020, Deutsche Bank, in a July 7 message to staff, stated that adding Epstein as a client in 2013 “was a critical mistake and should never have happened.” In response to these disclosures, Deutsche Bank’s stock price dropped, wiping out millions of dollars in market capitalization.
According to Partner Emma Gilmore, who led the litigation, “The extraordinary 50% recovery the Firm achieved on behalf of Deutsche Bank’s investors should be a wakeup call for all corporations who choose to conduct business with unsavory characters. As a woman prosecuting the case, this victory is all the more rewarding.”
Pomerantz attorneys for this case were Emma Gilmore, Jeremy A. Lieberman and Villi Shteyn.
Case Name
Karimi et al. v. Deutsche Bank AG, No. 1:20-cv-02854 (D.N.J.)
Class Period
March 14, 2017 to May 12, 2020, both dates inclusive
Claims
Securities Exchange Act of 1934