TD Bank faces a proposed CA$6.75 billion (US$4.9 billion) class action lawsuit in its home province of Ontario in connection to ongoing investigations of its anti-money laundering practices in the U.S.
TD shareholder and retail investor Gerald Gazarek launched the suit Tuesday on behalf of shareholders who purchased TD stock between August 26, 2021 and June 3, 2024. Gazarek purchased 100 shares of TD common stock on the Toronto Stock Exchange in 2023 at an average price of CA$80.70. On Tuesday, TD stock hit CA$74.92.
“Despite a long-history of AML control deficiencies that resulted in TD branches, facilities, and employees being implicated in money laundering, TD failed to disclose the nature and extent of its systemic AML control deficiencies to its investors or the public until April 30, 2024, when it announced a provision for a U.S. fine that it estimated at US$450 million,” according to the lawsuit, filed by Sotos Class Actions.
“TD also disclosed that the provision did not reflect the final aggregate amount of potential monetary penalties or nonmonetary penalties, which were unknown and not reliably estimable at the time,” the suit said.
TD’s TSX stock price was at CA$76.44 at noon Friday.
The bank is currently under investigation by the U.S. Department of Justice for violating anti-money laundering laws in connection to the illicit fentanyl trade. Criminals in New Jersey and New York allegedly bribed TD bankers with gift cards and money to launder proceeds from illegal drugs. Additionally, a TD employee in Florida has been accused of taking a series of $200 bribes to transfer millions of dollars 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. “More broadly, where our program was ineffective, we have held those leaders accountable and are taking action to drive the changes and meet our obligations.”
The bank recently overhauled leadership of both its global and U.S. AML programs, CEO Bharat Masrani told TD employees on April 30.
Jefferies Financial Group estimates that TD’s fines could total $4 billion on the high end, Bloomberg reported Wednesday. The bank confirmed that the cases in New Jersey, New York and Florida were included in the $450 million set-aside it announced April 30.
In regard to the proposed class action, a TD spokesperson said that the bank’s “disclosures and public statements are and have been accurate and consistent with TD's obligations under the securities laws and responsibilities to our shareholders. We will contest the assertions of these proposed class actions, which are without merit.”
An attorney at Sotos Class Actions did not return a request for comment.
