TD Bank is facing a proposed class action lawsuit in Ontario, with claims totalling 6.75 billion Canadian dollars, related to its contentious anti-money laundering (AML) practices in the United States. The lawsuit was filed by shareholder Gerald Gazarek, representing investors who purchased TD stock between 26 August 2021 and 3 June 2024. Gazarek bought 100 shares of TD at an average price of 80.70 dollars, while the stock has recently been trading at approximately 74.92 dollars.

According to the lawsuit, which is being pursued by Sotos Class Actions, TD Bank has a troubling history of AML control failures that resulted in multiple branches and employees becoming embroiled in money laundering activities. The plaintiffs allege that the bank withheld crucial information about these systemic deficiencies from investors until 30 April 2024, when it disclosed a provision for a potential fine in the U.S. estimated at 450 million U.S. dollars. Furthermore, the lawsuit claims that this provision did not encompass the total expected financial and non-financial penalties, which were uncertain at the time of the announcement.

The U.S. Department of Justice is currently investigating the bank for possible violations of AML regulations in connection with the fentanyl trade. Reports suggest that criminals in New Jersey and New York offered bribes to TD employees, while a worker in Florida is accused of accepting bribes to illegally funnel millions to Colombia.

In a statement, a TD spokesperson said, “Once we became aware of these matters, we took swift action against those involved and have been cooperating with the DOJ to address these issues.” The bank has also initiated significant leadership changes within its global and U.S. AML programs, as noted by CEO Bharat Masrani in an internal communication.

Financial analysts from Jefferies Financial Group estimate that TD could face fines reaching up to 4 billion U.S. dollars. The bank has acknowledged that the investigations in New Jersey, New York, and Florida are part of the 450 million provision announced earlier this year.

In response to the proposed class action, a TD spokesperson maintained that the bank’s disclosures and public statements have consistently met its legal obligations. They added, “We will challenge these allegations vigorously, as we believe they lack merit.”