TD Bank is confronting a CA$6.75 billion (US$4.9 billion) class action lawsuit in Ontario resulting from alleged deficiencies in its anti-money laundering (AML) practices. Gabrielle Saulsbery covered the TD Bank class action litigation in BankingDive.
Is TD Bank Safe? CA$6.75B AML Lawsuit Raises Concerns
The lawsuit, led by shareholder Gerald Gazarek, accuses the bank of failing to disclose systemic AML control issues, which have significantly impacted investor confidence.
Shareholder Lawsuit Alleges Hidden AML Issues and Stock Price Decline
Gazarek, who purchased 100 shares of TD stock in 2023 at an average price of CA$80.70, filed the suit on behalf of shareholders who bought TD stock between August 26, 2021, and June 3, 2024. By Tuesday, TD’s stock had fallen to CA$74.92, exacerbating investor concerns.
Filed by Sotos Class Actions, the lawsuit claims TD Bank did not reveal its long-standing AML control failures until April 30, 2024. On this date, TD announced a provision for a U.S. fine estimated at US$450 million but acknowledged that this amount did not reflect the full potential penalties.
“Despite a long history of AML control deficiencies, TD failed to disclose the nature and extent of its systemic AML control deficiencies to its investors or the public until April 30, 2024,” the lawsuit states.
TD Bank in DOJ Probe for Fentanyl Money Laundering
The U.S. Department of Justice (DOJ) is investigating TD Bank for alleged AML violations related to the illicit fentanyl trade. Reports suggest criminals in New Jersey and New York bribed TD bankers to launder drug money, while a TD Bank employee allegedly accepted bribes in Florida to transfer millions illegally to Colombia.
“When we became aware of these matters, we took action against these employees, coordinated efforts with the DOJ, and have supported their work to bring these criminals to justice,” a TD spokesperson told Banking Dive via email. CEO Bharat Masrani informed employees of a leadership overhaul in the bank’s global and U.S. AML programs on April 30.
TD Bank Faces Billions for Alleged AML Failures
Analysts, including those from Jefferies Financial Group, estimate TD’s fines could total up to $4 billion. Bloomberg reported that the cases in New Jersey, New York and Florida were included in the $450 million provision announced by TD.
AML is an ongoing concern for TD Bank, gaining the attention of CEO Bharat Masrani himself. Masrani commented on the laxity of some of the institution’s regulatory standards back in May 2023, in light of a TD Bank and DOJ money laundering probe.
TD Bank Denies AML Lawsuit Claims, Vows to Contest
Another TD Bank spokesperson, however, recently maintained that the bank’s disclosures have been accurate and compliant with securities laws. “We will contest the assertions of these proposed class actions, which are without merit,” he asserted.
The board of directors at TD Bank is now under pressure to ensure robust AML frameworks, transparency, and accountability to restore investor trust and stabilize the bank’s financial standing amidst these challenges.
Read the original article in BankingDive for complete coverage of TD Bank’s class action lawsuit over AML practices.
