Investors pursue Deutsche Bank and Bayer boards in US court
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US shareholders hope to take more than 70 current and former board members of Deutsche Bank and Bayer to court in two civil lawsuits seeking damages for their alleged personal responsibility in allowing corporate misconduct.
Among the named defendants in the lawsuits, which have been filed to the Supreme Court of the State of New York, are Deutsche and Bayer’s respective chief executives Christian Sewing and Werner Baumann, and their chairmen Paul Achleitner and Werner Wenning.
The lawyers also named Deutsche’s former chief executives Josef Ackermann, as well as Anshu Jain, Jürgen Fitschen and John Cryan.
The lawsuits have been filed by two small US-based shareholders in the companies. The plaintiffs are not seeking damages for themselves but are demanding that the board members compensate Deutsche and Bayer for the alleged harm caused by their actions.
“The lack of proper governance at Bayer and Deutsche Bank allowed management and the supervisory board to saddle the companies and their shareholders with billions of dollars in losses,” said Michelle Ciccarelli Lerach, plaintiff attorney in both cases.
In Deutsche case, the lawyers point to an “unprecedented litany of wrongdoing by Deutsche Bank’s managers and supervisors” which left the lender’s finances “gravely impaired and its long-term survival in doubt”.
The lawsuit also mentions “price fixing, sanctions violations, money laundering, critical deficiencies in its capital planning practices, financial reporting failures, inadequate . . . controls and procedures, bribery and . . . other breaches of fiduciary duties”.
Deutsche’s share price has fallen nearly 90 per cent over the past decade and the bank has paid billions of euros in fines and settlements relating to other legal cases.
In Bayer’s case, its 2016 takeover of US seedmaker Monsanto has exposed the German group to close to 50,000 claims from cancer patients over the alleged carcinogenic effects of Monsanto’s weedkiller Roundup.
The plaintiffs focus on the Monsanto takeover, arguing that Bayer’s due diligence was flawed and accuse executives and supervisors of ignoring red flags that indicated how risky the transaction would be.
The plaintiffs are trying to invoke German capital markets law but want the cases to be heard in New York City.
“It is not uncommon that foreign courts apply German law and vice versa,” said Thilo Kuntz, a securities law professor at Bucerius Law School in Hamburg, adding that “the first big hurdle in this case will be to convince the New York court to accept it at all”.
Michael Beurskens, professor of international business law at the University of Passau, said “it seems unlikely but not impossible” that the court would take the cases.
If the New York court agrees to hear the lawsuits, they could become landmark cases with wider repercussions for corporate Germany. “This would be disastrous for all [listed] German companies,” said Mr Beurskens.
Bayer told the Financial Times that the complaint was “without merit, both as a matter of fact and law”, and that it would defend the claim “vigorously”.
Deutsche Bank said: “This is a German corporate law issue regarding a German corporation which the German courts are best equipped to properly consider. Respectfully, we believe it does not belong in the New York courts.”