Pomerantz Secures a Major Victory for Deutsche Bank Investors

Pomerantz won an important victory for investors on May 18, 2022, when Judge Jed S. Rakoff of the United States District Court for the Southern District of New York denied in large part defendants’ motion to dismiss all claims for securities fraud in Karimi v. Deutsche Bank AG, a securities class action in which Pomerantz is sole Lead Counsel.

The complaint alleges that from November 7, 2018 through July 6, 2020 (the “Class Period”), defendants made materially false and misleading statements about its anti-money-laundering (“AML”) deficiencies and didn’t properly monitor or gave exemptions to customers it considered high risk, such as financier and accused sex offender Jeffrey Epstein. For example, defendants repeatedly assured investors that Deutsche Bank has “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.” Defendants also claimed Deutsche Bank’s “robust and strict” KYC program “includes strict identification requirements, name screening procedures and the ongoing monitoring and regular review of all existing business relationships,” with “[s]pecial safeguards . . . implemented for . . . politically exposed persons…” In truth, however, far from implementing a “robust and strict” KYC program with “special safeguards” for politically exposed persons (“PEPs”), during the Class Period, Defendants repeatedly exempted high-net-worth individuals and PEPs (including unsavory figures like Jeffrey Epstein and individuals sponsoring terrorism) from any meaningful due diligence, enabling their criminal activities through the use of the Bank’s facilities. That practice commenced with Deutsche Bank’s former CEOs onboarding, retaining and servicing Russian oligarchs and PEPs reportedly engaged in criminal activities.

Partner Emma Gilmore, who leads the litigation, said, in response to Judge Rakoff’s decision, “This case has been particularly meaningful to me given the misconduct at issue – Deutsche Bank’s lending and servicing of Jeffrey Epstein’s accounts – despite knowledge that he sexually abused at least 40 girls.”

Judge Rakoff has set a trial date for six months after his May 18, 2022 order.