TD Bank (First Horizon Corp.)

Case Details

Class Period: February 28, 2022 - May 3, 2023
Date Filed: May 22, 2023
Case Number: 23-cv-2763
Jurisdiction: District of New Jersey
icon-casetype Case Type: Securities Case

Case Summary

On May 22, 2023, Saxena White and its Co-Counsel filed a securities fraud class action against TD Bank and certain of its senior executives for violations of the Securities Exchange Act of 1934. The Complaint alleges that TD Bank made materially false and misleading statements and failed to disclose adverse facts about the Company’s business, operations, and prospects, thus artificially inflating the Company’s stock price and causing investors to suffer substantial losses when the truth eventually emerged.

Defendants’ allegedly false and misleading statements and omissions of material facts concern TD Bank’s ability to timely close a business combination with First Horizon Corporation — a combination that was ultimately abandoned. Specifically, the Complaint alleges that Defendants failed to disclose that TD Bank had deficient internal controls that posed a significant risk to the closing of the First Horizon transaction. TD Bank allegedly suffered from grossly ineffective internal controls regarding anti-money-laundering practices and failed to appropriately report unusual transactions or suspicious activity to U.S. regulators. Indeed, according to a report published by The Wall Street Journal, in “recent years,” TD Bank only “flagged 28 customer transactions” as suspicious. As a result, the Office of the Comptroller of the Currency and the U.S. Federal Reserve refused to approve the business combination within the necessary time frames.

On March 1, 2023, First Horizon revealed that TD Bank had informed First Horizon that it did not expect “the necessary regulatory approvals will be received in time to complete the [business combination] by May 27, 2023.” On this news, the price of First Horizon shares dropped 10.6% to close at $22.14 per share on March 1, 2023.

Thereafter, on May 4, 2023, First Horizon and TD Bank issued a joint press release titled “TD Bank and First Horizon Mutually Agree to Terminate Merger Agreement,” explaining that “TD informed First Horizon that TD does not have a timetable for regulatory approvals to be obtained for reasons unrelated to First Horizon.” During a First Horizon investor call held that day, First Horizon further revealed that TD Bank “could not provide assurance of regulatory approval in 2023 or 2024.” On this news, First Horizon’s share price plunged another 33%, to close at $10.06 per share on May 4, 2023.

On August 29, 2023, the Court appointed the Westchester Funds, Pentwater Funds, Sand Grove Funds, and Alpine Funds as Lead Plaintiffs and Saxena White as Co-Lead Counsel.

On December 15, 2023, Lead Plaintiffs filed their consolidated complaint. On February 9, 2024, Lead Plaintiffs filed an amended complaint based on new information regarding TD Bank’s AML deficiencies. On April 8, 2024, Defendants filed motions to dismiss the amended complaint. On June 14, 2024, Lead Plaintiffs’ filed their opposition to the motions to dismiss.