Articles Posted in Deutsche Bank

In London, six traders have pleaded not guilty to charges accusing them of trying to rig Euribor, which is the Brussels-based equivalent of the London Interbank Offered Rate (Libor). Euribor is key in establishing the rates on financial contracts, loans, and other financial products around the world.

The defendants include former Deutsche Bank (DB) trader Christian Bittar, current Deutsche trader Achim Kraemer, and former Barclays (BARC) traders Philippe Moryoussef, Colin Bermingham, Carlo Palombo, and Sisse Bohart. They are charged with one count of conspiracy to defraud through the making or obtaining of false or misleading Euribor rates in order allegedly enhance trading profits.

The criminal charges are related to a probe by the Serious Fraud Office. Five other traders from Deutsche Bank and Societe Generale were previously charged.

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Deutsche Bank AG will pay UK and US regulators $630M in fines to settle allegations that it did not stop approximately $10B in suspect trades that may have involved laundering money out of Russia. The trades at issue were mirror trades between the German lenders offices in New York, London, and Moscow. They took place between ’11 and ’15.

It was during this time that Russian blue chip stocks were purchased in rubles for clients and sold in the same amount of stocks at the equivalent price through Deutsche Bank’s London office soon after. As a result, reports The Guardian, funds were transferred through the bank to accounts abroad, including in Latvia, Estonia, and Cyprus.

Deutsche Bank is accused of not getting information about customers that took part in the mirror trades. As a result, the bank’s DB Moscow executed over 2400 pairs of mirror trades. Sellers were registered in locations offshore. Shares in Russian companies were paid for in rubles, the sellers were paid in dollars.

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In a deal reached with the US Justice Department, Société Générale will pay $50M to settle civil charges accusing the bank of hiding that the residential mortgaged-backed securities (RMBS) that it promoted and sold were of poor quality. According to the government, the French bank made false representations involving the SG Mortgage Securities Trust 2006-OPT2, a $780M debt issue that it organized more than a decade ago. As part of the settlement, Société Générale admitted that it hid how many of the loans underlying the RMBS shouldn’t have been securitized or were not properly underwritten.

In a statement of facts, Société Générale took responsibility for its conduct. The bank admitted that it falsely represented that loans underlying the residential mortgage-backed security had been originated according to the underwriting guidelines of the loan originator. It also represented to investors that when the SG 2006-OPT2 was originated, no loans in the RMBS had a combined loan-to-value ratio or loan-to-value greater than 100%–this is a claim that Societe General is now admitting was false.

As a result of the bank’s actions, said the DOJ, investors lost “significant” amounts of money and they may lose more. Investors that were impacted include a number of financial institutions that are federally insured.

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The mortgage securities fraud deal arrived at between Deutsche Bank (DB) and the Department of Justice is now final. As part of the settlement, the German lender will pay a $3.1B civil penalty and $4.1B in relief to borrowers, homeowners, and others that were impacted because it purportedly misled investors about the mortgage securities it was selling before the housing market failed.

Although the agreement was announced last month, the details of the resolution have just been released to the public. This includes information that as far back as May 2006, a Deutsche Bank supervisor had cautioned one of the firm’s senior traders about one mortgage lender that had become too lax with its underwriting practices.

In a Statement of Facts that was part of the agreement, Deutsche Bank acknowledged that it was aware that it was not fully disclosing the risks involved with the loans that it was bundling and selling. Deutsche Bank CEO John Cryan issued a written statement apologizing “unreservedly” for the bank’s conduct. Cryan said that Deutsche Bank now has better standards in place.

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The US government has arrived at multibillion-dollar settlements with Credit Suisse Group AG (CS) and Deutsche Bank AG (DB) to settle allegations involving toxic securities. It also has filed a separate lawsuit against Barclays (BARC) over its alleged sales of toxic mortgage-backed securities.

In the Deutsche Bank case, the US Justice Department had sought $14B to settle allegations that the bank sold investors toxic mortgage securities. Now, the German lender will have to pay $3.1B immediately. It has promised to pay $4.1B over five years to a US consumer relief fund. However, Deutsche Bank remains under investigation by US and UK regulator over suspect trades involving Russian stock, foreign exchange rate rigging, precious metal-related price violations, and alleged violations of US sanctions against number of countries, including Iran.

In the settlement with Credit Suisse, the bank will pay a $2.48B penalty and $2.8B in relief to communities and homeowners impacted by the drop in home prices during the financial crisis. The consumer relief will be paid over five years.

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Deutsche Bank AG (DB) has agreed to pay $37M to conclude the US government probes into its handling of trades in dark pool trading venues. The German bank also admitted that between 1/2012 and 2/2014 traders were misled about the way the it ranked its SuperX dark pool and other trading venues. The government settlements were reached with the US Securities and Exchange Commission and the New York Attorney General. Meantime, the Financial Industry Regulatory Authority fined Deutsche Bank $3.25M, noting “deficient disclosures” involving dark pool trading.

According to the NY AG and the SEC, Deutsche Bank told investors that it ranked its dark pools according to a number of factors, including transaction costs. However, some its technology purportedly wasn’t functioning correctly which means that the order-routing choices were not organized according to the factors noted. The German bank also is accused of disregarding its own method for ranking dark pools and placing its own dark pool in a preferred tier.

The government believes that between 1/2012 and 2/2013, Deutsche Bank employed outdated dark-pool rankings to decide how to route orders rather than updating its ranking model on a regular basis.The bank discovered the technical glitch in 2013, but did not fully correct the issue and waited until the following year to notify clients.

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In New York, US District Judge Deborah A. Batts has certified a class of investors to go ahead with fraud claims that they’ve brought against Wells Fargo (WFC), RBS Securities (RBS), and Deutsche Bank (DB). The banks underwrote $7.7B of NovaStar mortgage-backed securities. The lead plaintiff in the MBS fraud case is the New Jersey Carpenters Health Fund. Wells Fargo Advisors LLC was previously Wachovia Capital Markets.

The plaintiffs contend that the defendant banks lied in the securities’ offering documents. Judge Batts held that the fundamental question at issue is whether the bank did, in fact, make the allegedly misleading or materially false statements.

NovaStar issued  six residential mortgage backed-securities that the banks underwrote in 2006. These RMBS collectively held over $7.7B in assets. By mid-2009,  in the wake of the housing collapse, over half the mortgages backing the securities had defaulted. Investors sustained major losses.

The New Jersey Carpenters Health Fund, which sued not just the banks in 2008 but also subprime lender NovaStar and credit rating agencies Standard & Poor’s and Moody’s, had invested $100K in one of the securities. The credit raters are no longer defendants in the case as the claims against them from this mortgage-backed securities case were dismissed in 2011. Because NovaStar’s successor has filed for Chapter 11 bankruptcy protection, the case against the subprime lender has been stayed.

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 Nomura Home Equity Loan, Inc. and Nomura Asset Acceptance Corporation have agreed to jointly pay over $3M to settle allegations that they engaged in the sale of faulty residential mortgage-backed securities (RMBS) to the Western Corporate Federal Credit Union and the U.S. Central Federal Credit Union. The National Credit Union Administration brought the RMBS fraud case on behalf of the  two corporate credit unions.
 
It was in 2011 that the NCUA Board, while serving as liquidating agent for both financial institutions, brought the claims against the Nomura entities. The RMBS lawsuit was brought in federal district courts in Kansas and California.
The $3M settlement dismisses NCUA’s pending cases against the two firms. By settling, neither firm is denying or admitting to the alleged wrongdoing.

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Deutsche Bank (DB) has agreed to pay $38M to settle a securities lawsuit alleging that it colluded with other banks to manipulate silver prices. According to Reuters, this agreement could compel other banks that have been accused of the same misconduct to settle.

According to the complaint, investors are accusing the German lender, Bank of Nova Scotia (BNS), and HSBC Holdings (HSBC) of fixing silver prices. They purportedly did this during a secret meeting conducted daily known as the Silver Fix. The silver manipulation scam allegedly began in 2009 and the alleged colluders suppressed prices on about $30B of silver financial instruments and silver that were traded annually.  As a result of the alleged silver manipulation scam, banks were purportedly able to make returns that could exceed 100 percent annualized.

Investors claim that UBS AG (UBS) exploited the silver rigging. However, U.S. District Judge Valerie Caproni dismissed the Swiss lender from the case. She said that even if UBS profited from the silver manipulation there was no evidence provided to show that the Swiss bank had rigged prices.

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A plaintiff who is a participant in Wells Fargo’s 401(K) plan is suing the bank. The individual claims that the company’s cross-selling scandal has caused its stock price to drop significantly and this has resulted in hundreds of millions of dollars in damages to the retirement plan.
It was just last month that regulators imposed a $185M fine on Wells Fargo for setting up 2.1 million credit card accounts and unauthorized deposits for banking customers so as to satisfy sales quotas. Some employees allegedly set up debit cards for customers without their knowledge, even assigning them PIN numbers.
Although Wells Fargo is settling with the Los Angeles City Attorney, the U.S. Office of the Comptroller of the Currency, and the U.S. Consumer Financial Protection Bureau, it is not denying or admitting to the allegations.