TD:CC - TD Bank's Fentanyl Probe: Assessing The Damage

2024-05-03 19:46:45 ET

Summary

• TD Bank shares recently plunged 1.5% on an otherwise lukewarm day for banking stocks, as news broke that a company branch had allegedly been facilitating money laundering for Fentanyl dealers.
• The bank has so far booked $450 million related to fines stemming from the deal, and says that it expects more.
• In this article I will explore the risks TD faces and costs it might incur related to its ongoing Fentanyl scandal.
• I own TD Bank stock and will probably buy more if the scandal-driven selloff continues, but I wouldn't encourage the general investing public to do the same.
• If the fines play out in a "worst case scenario" then TD's stock could be down for a period of many years.

The Toronto-Dominion Bank ( TD )( TD:CA ) stock was in a freefall during today's trading hours, as details regarding the Department of Justice's probe of the company's alleged fentanyl money laundering made their way through the media. Months ago, news broke that TD’s First Horizon ( FHN ) deal was cancelled due to allegations of aiding money laundering by unnamed drug cartels. Earlier this week, TD announced that it had booked a $450 million charge related to that investigation. Yesterday, the Wall Street Journal reported that the money laundering specifically involved fentanyl-related transactions at a branch in New jersey. The stock sold off today in massive volume as news about the allegations became widely known....

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