American Stock Exchange Nasdaq has had to intervene to stop Market Makers from walking away from Danske Bank’s volatile stock. The actions follow the news that the Danish bank is being investigated by US law enforcement agencies in regards to suspected money laundering.
On Friday, Nasdaq put trading of derivatives tied to shares of Danske Bank in a so-called stressed market condition. This means the exchange can allow market makers to provide quotes using wider spreads.
This was the first time the exchange had taken such a measure against the Danish bank, and Mikael Siewertz, product manager at Nasdaq in Stockholm told the Gulf Times that Nasdaq expects similar market conditions today, however, he does think cooler heads may prevail this Monday.
Us Authorities Launch an Investigation into Danske Bank
The volatile stock is in response to rumors that US law enforcement agencies are looking into Danske Bank in relation to money laundering. On Friday, The Wall Street Journal reported that: “The [U.S.] Justice Department, Treasury Department, and Securities and Exchange Commission [SEC] are each examining Danske Bank after a confidential whistleblower complaint was filed to the SEC more than two years ago.”
The bank is accused of facilitating an estimated $150 billion in money laundering flows which were held in non-Estonian customer accounts at the bank’s Estonian branch from 2007 to 2015. The money came from countries such as Russia, Azerbaijan, and Moldova.
The news outlet also reported that: “The whistleblower complaint identified Deutsche Bank AG and Citigroup Inc., both overseen by U.S. regulators, as involved with transactions into and out of Danske Bank’s Estonian branch.”
Citing a person familiar with the matter, The Wall Street Journal said that Deutsche Bank was as a correspondent bank for Danske that handled dollar wire transfers. Citigroup’s Moscow office was allegedly involved with some of the transfers through Danske’s Estonian branch.
Ceo of Danske Bank Ignored Warnings of Money Laundering
According to the Financial Times, the CEO of Danske Bank Thomas Borgen ignored warnings of suspicious transactions. Specifically, he ignored advice to scale back its Estonian branch when initially warned about the money laundering activities.
According to meeting minutes seen by the Financial Times, the CEO was informed back in October 2013, that: "The level of activity in its [Danske Bank’s] Estonian branch from outside the country — mostly from ex-Soviet states and Russia — was higher than that of rivals and ‘needed to be reviewed and potentially reduced’."
However, US authorities have not yet officially confirmed the investigation. Since last year, Danske has been conducting its own internal investigation into the activity in its Estonian branch. According to a notice on Danske’s website, it plans to release the results on September 19. Danish and Estonian authorities have also been looking into Danske Bank.
