Deutsche Bank AG

DB litigation spending fell from 800M EUR to 100M EUR in first nine months of 2017 vs 2016, per Bloomberg

Bloomberg reported that Deutsche Bank spent 100 million euros on litigation in the first nine months of 2017, down from 800 million in the same period one year earlier. This was reported in context of Florian Drinhausen's appointment as General Counsel, which was seen as DB making headway in reducing major legal cases.

DB processed hundreds of Epstein transactions totaling millions of dollars that should have prompted additional scrutiny

According to the DFS consent order cited in the complaint, Deutsche Bank processed hundreds of transactions totaling millions of dollars that should have prompted additional scrutiny given Epstein's criminal history. These included: payments to alleged victim recruiters, more than $7M in settlement payments, $6M in legal fees, more than $800K in cash withdrawals, and payments to numerous women with Eastern European surnames.

DB's own reputational risk committee imposed monitoring requirements on Epstein accounts that the bank failed to adhere to

DFS found that Deutsche Bank's own reputational risk committee had imposed monitoring requirements on Epstein's bank accounts, but the bank failed to adhere to those self-imposed requirements. Throughout the relationship, very few problematic transactions were ever questioned, and even when they were, they were usually cleared without satisfactory explanation.

DB shares fell 4.49% on Fed audit news (May 13, 2020) and 1.31% on DFS $150M fine news (July 7, 2020)

Two corrective disclosure events: (1) May 13, 2020: shares fell $0.31 (4.49%) to close at $6.60 on news of Fed audit criticizing US operations. (2) July 7, 2020: shares fell $0.13 (1.31%) to close at $9.82 on news of DFS $150M fine for Epstein/Danske/FBME failures. Class period: Nov 7, 2017 through July 6, 2020.

General Counsel Florian Drinhausen left DB by mutual agreement on May 31, 2020, two weeks before Fed audit criticism became public

On Nov 7, 2017, DB announced Florian Drinhausen would become General Counsel, replacing co-GCs Christof von Dryander and Simon Dodds, signaling to investors the bank was remediating AML and control failures. On April 29, 2020, DB announced Drinhausen would leave the company on May 31, 2020 by mutual agreement, without explanation. Two weeks later (May 13, 2020), the Fed audit criticism was reported.

$220 million multi-state LIBOR manipulation settlement including New Jersey (Oct 2017)

On October 25, 2017, New Jersey Attorney General Christopher S. Porrino announced NJ is part of a $220 million, multi-state settlement with Deutsche Bank resolving allegations of fraudulent and anti-competitive conduct involving manipulation of LIBOR. Deutsche Bank's manipulations harmed multiple government agencies and entities in NJ, including the NJ Economic Development Authority.

Federal Reserve sharply criticized DB US operations in internal audit; sent report to CEO Sewing expressing continued dissatisfaction with AML controls

On May 13, 2020, Sueddeutsche Zeitung reported that the Federal Reserve had sharply criticized Deutsche Bank's U.S. operations in an internal audit. The audit found DB had failed to address multiple concerns identified years earlier, including AML and other control procedures. In late March 2020, the Fed sent an audit report to CEO Christian Sewing and other top executives 'expressing continued dissatisfaction' with AML controls and liquidity management at its U.S. unit, based on investigations in late 2019 and early 2020. DB shares fell 4.49% on this news.

DFS fined Deutsche Bank $150 million for failing to flag suspicious transactions from Epstein, Danske Estonia, and FBME Bank accounts

On July 7, 2020, the NY DFS fined Deutsche Bank AG, its New York branch, and Deutsche Bank Trust Company Americas $150M via consent order for neglecting to flag numerous questionable transactions from accounts associated with Jeffrey Epstein and two correspondent banks (Danske Estonia and FBME Bank). DFS Superintendent Linda Lacewell stated DB 'failed to adequately monitor the activity of customers that the bank itself deemed to be high risk.'

DFS Superintendent Lacewell: DB 'inexcusably failed to detect or prevent millions of dollars of suspicious transactions' from Epstein

DFS Superintendent of Financial Services Linda A. Lacewell stated: 'in each of the cases that are being resolved today, Deutsche Bank failed to adequately monitor the activity of customers that the bank itself deemed to be high risk.' She further stated: 'In the case of Jeffrey Epstein in particular, despite knowing Mr. Epsteins terrible criminal history, the bank inexcusably failed to detect or prevent millions of dollars of suspicious transactions.'

Karimi v. DB class action timeline reveals pattern: DB hired GC to signal AML fix (Nov 2017), GC left unexplained (Apr 2020), Fed audit leaked (May 2020), DFS fine (Jul 2020)

The Karimi class action complaint (Case 2:20-cv-08978, D.N.J.) reveals a chronological pattern of Deutsche Bank's AML remediation theater: (1) Nov 2017: hired Drinhausen as sole GC to signal reform; (2) 2017-2019: filed three 20-F annual reports with SOX certifications claiming effective controls; (3) Apr 29, 2020: Drinhausen departed 'by mutual agreement' without explanation; (4) May 13, 2020: Fed audit criticism leaked (shares -4.49%); (5) Jul 7, 2020: DFS $150M fine for Epstein/Danske/FBME failures (shares -1.31%). The 2-week gap between Drinhausen's departure announcement and the Fed audit leak suggests he may have been aware of impending regulatory action. Class period: Nov 7, 2017 - Jul 6, 2020.

DB 20-F filings (2017-2019) claimed effective AML remediation and internal controls while failing to monitor high-risk clients including Epstein

Deutsche Bank's annual reports on Form 20-F for years 2017, 2018, and 2019 (filed March 16, 2018; March 25, 2019; March 20, 2020) each: (1) touted the bank's AML remediation efforts, (2) confirmed effectiveness of disclosure controls and internal control over financial reporting per SOX, (3) contained only generic boilerplate risk warnings not tailored to known deficiencies regarding high-risk clients (Epstein, Danske Estonia, FBME Bank). SOX certifications were signed by CEOs Cryan (2017) and Sewing (2018-19) and CFO von Moltke (all years). Filed as Case 2:20-cv-08978 in the District of New Jersey.