Bloomberg Law
May 23, 2023, 7:22 PM

TD Bank Sued by First Horizon Investors After Acquisition Fails

Bernie Pazanowski
Bernie Pazanowski
Reporter

TD Bank and its top officers were sued in a class action filed by First Horizon Corp. stockholders claiming false statements made by the defendants inflated the Tennessee bank’s stock, which then tumbled after TD’s acquisition of it failed.

According to the New Jersey federal court complaint, TD Bank and its officers continuously made public comments that the deal would go through by the mid-2023, at the latest.

Those statements were knowingly false, the complaint asserts. The defendants knew there were problems getting approval for the deal from federal regulators because there were problems with TD Bank’s internal controls, including its anti-money laundering practices, the plaintiffs allege.

As a result of those revelations, First Horizon’s stock dropped from a high of $24.64 per share when the deal was announced to $10.06 on May 4 after it was abandoned.

Filed by the Arbitrage Fund, the suit seeks class certification for all others who purchased First Horizon stock between Feb. 28, 2022, when the acquisition was first announced, and May 3, 2023, when the deal was terminated.

First Horizon has 427 branches in southern US states and TD Bank which is a Canadian company that has been moving into US banking markets since 2005, hoped to increase its presence in the south through the acquisition.

The complaint said that the defendants violated Section 10(b) of the Securities and Exchange and Rule 10b-5 promulgated there under, by carrying out a scheme to deceive the investing public, artificially inflating the price of First Horizon’s stock, and causing investors to purchase First Horizon stocks at that price.

The complaint alleges that to carry out the scheme, the defendants made false or misleading statements to the investing public.

The complaint also alleged that the individual defendants violated section 20(a) of the Exchange Act by having control over the allegedly fraudulent scheme and disseminating the false or misleading information.

Elizabeth Goldenshtein of TD Bank told Bloomberg Law that “TD’s public disclosures are accurate. The lawsuit is without merit and TD will vigorously defend it.”

Carella Byrne Cecchi Brody & Agnello PC, Entwistle & Cappucci LLP, and Saxena White PA represented Arbitrage Fund.

The case is Arbitrage Fund v. Toronto-Dominion Bank, D.N.J., No. 1:23-cv-2763, complaint filed 5/22/23.

To contact the reporter on this story: Bernie Pazanowski in Washington at bpazanowski@boombergindustry.com

To contact the editors responsible for this story: Martina Stewart at mstewart@bloombergindustry.com; Andrew Harris at aharris@bloomberglaw.com

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