According to a report by German financial regulator BaFin, senior management at Deutsche Bank (DB) allegedly behaved “negligently” related to the rigging of Libor rates. The European regulator has been investigating the bank over its possible involvement in the manipulation of the inter-bank rate setting process.
BaFin contends that Deutsche Bank’s outgoing joint leader Anshu Jain may have lied to the European nation’s central bank, the Bundesbank, by purposely making inaccurate statements” about rate rigging during a 2012 interview. The regulator wants Deutsche Bank to be subject to special supervisory measures.
The Financial Times reports that, Jain, who resigned from his position and will officially step down at the end of the month, is accused of telling Bundesbank that he did not know about the rumors about possible rigging even though e-mails about a meeting on this matter were forwarded to him in 2008. Deutsche Bank, however, maintains that Jain did not lie or mislead the German central bank during the interview. The bank said that the BaFin report confirms its own findings that no current or ex-members of its Management Board or Group Executive Committee directed firm employees to rig intra-bank offered rate submissions or knew of any attempted manipulations before June 2011.
Deutsche Bank has paid over $9 billion in fines to resolve claims of Libor rigging. In April, the bank was fined $2.5 billion for manipulating interest-rate benchmarks.
BaFin’s report also brings up questions about whether one of Deutsche Bank’s New York-based traders tried to rig ISDAfix, which is a benchmark for yearly swap rates for swap transactions. The German regulator said that the trader manipulated the benchmark to enhance the value of an option at the expense of global investment management firm Pimco. An undocumented verbal warning was issued to the trader after the fund manager complained.
In other ISDAfix-rigging news, the Commodity Futures Trading Commission continues to investigate numerous banks. Several of these firms receive subpoenas from the regulator in 2013. To date, Barclays PC (BARC) is the only bank to agree to pay a fine to settle the allegations. However, according to Bloomberg, a source knowledgeable about the CFTC’s ISDAfix probe said that Barclays wasn’t the only bank to manipulate this benchmark.
The CFTC said that by trying to rig ISDAfix, Barclays stood to profit on derivatives trades with clients that wanted to hedge against interest rate movements. E-mails and recorded phone calls examined by the CFTC demonstrate that Barclays traders talked about their plans to manipulate ISDAfix to benefit their other derivatives trades.
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Deutsche Bank Says Co-CEO Jain Didn’t Mislead Central Bankers, Bloomberg, June 26, 2015
German regulator says Deutsche Bank CEO misled Bundesbank -FT, CNBC/Reuters, June 26, 2015