NEW YORK—A U.S. judge on Monday said shareholders can sue Deutsche Bank AG for allegedly hiding shortfalls in its internal controls while doing business with risky, ultra-rich clients like the sex offender Jeffrey Epstein and Russian oligarchs.
U.S. District Judge Jed Rakoff in Manhattan said shareholders may try to prove in their proposed class action that the German bank was aware its know-your-customer and anti-money laundering controls were ineffective, and that its share price fell as the truth became known.
In a 30-page decision, Rakoff said the complaint described specific processes that Deutsche Bank knowingly undermined through an “unwritten but pervasive practice” of exempting rich, politically connected clients from normal internal scrutiny….