A new complaint was filed against Toronto-Dominion Bank (TD) (TSE:TD) by shareholder (plaintiff) James Tiessen on October 22, 2024, in the U.S. District Court for the Southern District of New York. The defendants in the complaint are the company, President and CEO Bharat Masrani, and executives including Kelvin Vi Luan Tran, Riaz Ahmed, and Leovigildo Salom.
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The plaintiff alleges that he bought TD stock at artificially inflated prices between February 29, 2024 and October 9, 2024 (the “Class Period”) and is now seeking compensation for his financial losses. To learn more about the lawsuit click here.
Toronto-Dominion Bank, aka TD Bank, is a Canadian banking and financial services provider with operations across the globe. It provides personal banking, commercial banking, and small business solutions. TD Bank is among the top 10 banks in North America.
The filed complaint alleges that during the Class Period, the defendants misled TD Bank investors in violation of Sections 10(b) and 20(a) of the Securities Exchange Act.
Plaintiff’s Allegations
According to the complaint, TD Bank intentionally misrepresented information presented in its financial statements and was unable to stop money laundering practices. In particular, the defendants allegedly assured investors that the bank was trying its best to comply with the U.S. anti-money laundering (AML) regulations.
For instance, the CEO stated on February 29, 2024, that the bank understood the risk associated with the alleged money laundering issue and was fixing it. The defendants continued to reiterate similar comments on different occasions during the Class Period to try to calm investors.
In April 2024, however, the bank released a statement noting that it had reserved $450 million for potential penalties related to the U.S. government’s AML investigation. On the same day, the bank accepted some allegations. Then, in May 2024, the CEO stated that the bank had fallen short of the AML regulations and was unable to “effectively monitor, detect, report, or respond” to money laundering activities.
TD Bank’s Misrepresentations
In contrast to the claims made by TD Bank and its executives, the company was not fully able to monitor and prevent money laundering. The truth became clear on October 10, 2024, when the bank was slammed with a $3.09 billion settlement fine in connection with money laundering charges by several U.S. regulators. TD Bank failed to have appropriate internal controls to detect and prevent money laundering activities linked to drug cartels.
Moreover, the Office of the Comptroller of the Currency (OCC) imposed an asset cap of $434 billion on TD Bank. It is also subject to more stringent approval processes for its products and services. To make things worse, the U.S. Department of Justice called the AML case of TD Bank one of the largest in the history of the U.S. banking sector. TD Bank pleaded guilty to Bank Secrecy Act program failures and is also the first U.S. bank in history to plead guilty to conspiracy in money laundering.
Following the news, TD stock price collapsed by 10.2% in just two trading days.
To conclude, the defendants allegedly misled investors about the bank’s involvement in money laundering practices. Year-to-date, TD shares have declined more than 9%.
