Photographer: Alex Kraus / Bloomberg
Photographer: Alex Kraus / Bloomberg
Deutsche Bank AG agreed to pay more than $ 130 million to settle criminal and civil charges that bribed foreign officials and manipulated the futures market on precious metals through a trading tactic known as counterfeiting.
The Frankfurt-based bank accepted an agreement whereby he would not be prosecuted until he re-participated in the internship for more than three years and was not required to plead guilty to the charges. The case was filed by federal prosecutors in Brooklyn, New York and Washington, who were fined $ 920 million JPMorgan Chase & Co. last year, the largest sanction ever related to counterfeiting.
Large banks have been quick to conclude legal agreements ahead of the change in U.S. administrations, in part out of concern that there may be harsher fines under a Democratic president. Three major U.S.-based banks agreed to pay more than $ 4 billion in settlements announced just before the November election, on issues ranging from bribery to market manipulation.
Deutsche Bank’s deal with the Justice Department was confirmed Friday at a remote hearing in Brooklyn federal court. The bank will pay $ 80 million in criminal penalties for violating the Foreign Corruption Practices Act and another $ 5.6 million for commodity fraud, although the bank received credit for the latter fine for a previous agreement with the Commodity Futures Trading Commission.
“Repair actions”
In addition, Deutsche Bank will pay more than $ 43 million to the Securities and Exchange Commission to resolve a parallel civil action against it for bribery conduct. The SEC investigation found that it lacked adequate internal accounting controls for third-party intermediaries, with $ 7 million in suspicious payments recorded as legitimate business expenses. Bank employees also forged invoices and other documents, according to the SEC.
“While we cannot comment on the particulars of the resolutions, we take responsibility for these past actions, which took place between 2008 and 2017,” Deutsche Bank spokesman Dan Hunter said in a statement. “Our comprehensive internal investigations and full cooperation with Department of Justice and SEC investigations into these matters reflect our transparency and determination to put these issues firmly into the past.”
The bank has taken “major remedial action,” Hunter said, investing more than 1 billion euros ($ 1.222 billion) in data, technology and controls, improving its training and increasing its global staffing against financial crime in more than 1,600.
Spoofers trick other investors into buying or selling by placing buy or sell orders with no intention of filling them out. This creates an artificial demand that drives prices up or down. With common computerized trade, the defunct practice has become a threat to market legitimacy. The spoofing contributed to the instantaneous fall of May 2010, when nearly $ 1 trillion was temporarily ended in the U.S. stock market.
QuickTake: Spoofing is a silly name for serious mating on the market
Traders argue that crime is too difficult to distinguish from legitimate order cancellations. Prosecutors must show that traders intended to cancel their orders in advance.
Two Deutsche Bank traders, Cedric Chanu and James Vorley, were convicted in September of manipulating the prices of gold and silver contracts. He was accused of introducing false bids for contracts, canceling them before filling orders and taking advantage of price changes in between.
Bribes to “consultants”
On the part of the foreign bribery case, the United States says Deutsche Bank executives agreed to pay millions of dollars to “consultants” for investment managers in Abu Dhabi and Saudi Arabia that were actually bribes for intermediaries. to win business.
In Abu Dhabi, managers provided financing for the yacht of an investment officer and cash, totaling $ 3.5 million, which helped the bank earn $ 35 million in commissions.
In Saudi Arabia, payments were made to an entity controlled by the wife of an investment manager in exchange for overseeing hundreds of millions of dollars in family assets of a Saudi official. Payments amounted to more than a million dollars, including a loan of more than 600,000 euros for the asset manager to buy a house in France.
In both cases, senior bank executives were aware of the payments, according to court records.
Deutsche’s problems
Deutsche Bank’s legal problems add to a long downward spiral of declining revenues, stubborn fixed costs, declining credit ratings and rising borrowing costs. The bank has paid more than $ 18 billion in fines for financial misconduct in the decade following the financial crisis.
In July, it agreed to pay the New York banking regulator $ 150 million for a chain of compliance deficiencies, including a half-decade of lax oversight of the financial relationships of convicted sex offender Jeffrey Epstein.
German authorities fined him 13.5 million euros in October for work-related money laundering offenses Danske Bank A / S. The bank failed on more than 600 occasions to issue timely alerts on suspicious transactions, Frankfurt prosecutors said at the time.
The case is U.S. v. Deutsche Bank AG, 20-cr-584, U.S. District Court, Eastern District of New York (Brooklyn).
– With the assistance of Yalman Onaran
(Updates with details according to the fourth and fifth paragraphs and with specific sums.)