Danske Bank CFO Secures Dismissal of Securities Fraud Lawsuit

Paul, Weiss obtained the dismissal with prejudice of all claims in a securities class action brought against our client, the former CFO of Danske Bank. Judge Valerie Caproni of the Southern District of New York dismissed with prejudice the third amended complaint brought by purchasers of Danske Bank American Depository Receipts that alleged various claims under Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 against Danske Bank and its directors and officers. Plaintiffs alleged that Danske Bank and the individual defendants had made a series of misrepresentations relating to an alleged $230 billion money laundering scheme involving Danske Bank’s Estonian branch.

Judge Caproni dismissed plaintiffs’ claims on multiple grounds. The court found that plaintiffs failed to plead fraud with particularity and failed to allege a material misrepresentation or omission, a strong inference of scienter, or scheme liability. As Judge Caproni explained, “Plaintiffs’ Complaint uses two terse paragraphs generically to allege why 36 pages of quotations spanning 83 paragraphs contain false or misleading statements. That is far too great a weight for sweeping explanations of fraud to bear.” The court also concluded that plaintiffs had failed to adequately allege scienter where they could not allege that any defendant “had access to or received information contradicting their representations” about the alleged money laundering. The court thus declined to make the “inferential leap that because DB failed adequately to investigate and resolve extensive AML lapses at the Estonian Branch, Defendants must have acted with scienter when they made the various statements touching on Estonia.”

The Paul, Weiss team included litigation partners Daniel Kramer and Jeffrey Recher.