Ex-Deutsche Bank Employees May Face Libor Rigging Charges

Bloomberg reports that according to sources, the U.S. Department of Justice is getting ready to file securities charges against former employees of Deutsche Bank AG (DB) for manipulating the London interbank offered rate. The government is looking at five ex-traders who may have rigged the U.S. dollar equivalent of the interest-rate benchmark. If the criminal charges do go through these would be the first ones against the German bank’s traders over Libor.

Earlier this year, Deutsche Bank agreed to pay $2.5B to regulators for rigging Libor and other benchmarks: $600M to the New York Department of Financial Services, $775M to the DOJ, $800M to the Commodities Futures Trading Commission, and $340M to the U.K’s Financial Conduct Authority. The latter had doubled its fine because of what it considered the bank’s “slow” and “ineffective response to questions and purportedly “false, inaccurate, or misleading” statement that it made.

The global settlement included a ban against Deutsche Bank’s traders who had engaged in interest rate rigging. The bank’s DB Group Services in the U.K. also pleaded guilty to one count of wire fraud for its involvement in the scam to defraud counterparties to interest rate swaps by manipulating U.S. Dollar LIBOR contributions.

In other Libor rigging news, the trial against ex-UBS (UBS) and Citi (C) trader Tom Hayes continues. Hayes is the first person to go to trial over Libor rigging allegations. He pleaded not guilty to multiple counts of conspiracy to defraud. Prosecutors claim that Hayes, in pursuit of bigger bonuses, persuaded, sometimes even bribed, contacts at broker-dealers and other banks to rig Libor.

In court, Hayes said that he only admitted to engaging in wrongful actions when Britain’s Serious Fraud Office interviewed him because he didn’t want to be extradited to the United States. Now he is claiming that he didn’t do anything wrong, his actions were not uncommon practice in the industry, and he was merely doing his job. Hayes contends that his managers knew of his efforts to manipulate Libor. He believes that more senior parties are using him as a scapegoat.

Ex-Deutsche Bank Traders Said to Face Libor Charges From DOJ, Bloomberg, July 10, 2015

Deutsche Bank to Pay $2.5B for Rate Rigging, Institutional Investor Securities Blog, April 3, 2015

Former Merrill Lynch, Oppenheimer, Deutsche Bank Broker is Ordered by FINRA To Pay Investor $11M Over Alleged Securities Fraud, Stockbroker Fraud Blog, April 19, 2013