The class action plaintiffs’ claims centered on alleged misrepresentations about DB’s financial condition given extensive breakdowns in anti-money laundering (“AML”) controls at DB’s branch in Estonia between approximately 2007 and 2015, and also the fallout from the discovery of the lapses. The Southern District of New York Court, however, dismissed the complaint, since plaintiffs, who were once provided with an opportunity to try to amend their complaint, failed to satisfy the judge that their claims should not fail as a matter of law.
The case concerned the much-publicized money laundering scandal in DB’s Estonia branch. There were allegations of money laundering growing from $8.3 Billion to $230 Billion from July 2018 to February 2019 at a particular unit of DB. Although the plaintiffs tried to make out claims for securities fraud in their complaint, the Court determined that they failed to plead fraud with sufficient particularity required under the heightened pleading requirements for fraud claims.
Whether the decision will be appealed remains to be seen. However, this decision is important to keep in mind for those dealing with the various fallouts from the money laundering scandals occurring in the Baltic States (Lithuania, Estonia, Latvia). It will likely serve as precedent not only in securities class action fraud cases, but all fraud cases that could potentially be brought against international branches of banks and their officers and directors in future cases for alleged fraud. Of course, all cases are different and involve different facts and proofs. But what is important to take away from this decision is the emphasis on the need to plead with particularity all the elements of fraud claims when trying to bring such claims in U.S. courts.1303000-1303992-https-ecf-nysd-uscourts-gov-doc1-127127464100
Having recently returned from a couple months in Latvia and dealing with cases involving Estonia also, I am definitely seeing increased cross-border activity on international litigations. This trend is apparent in the rise of Section 1782 applications and the increased cooperation occurring between litigants and courts internationally, with cases often involving parallel proceedings in courts worldwide. Please contact me at firstname.lastname@example.org or +1-609-216-6105 to discuss these matters. Benaur Law LLC is an international boutique litigation firm, specializing in cross-border judgment enforcement, asset recovery, investigations and general business litigation matters.