Deutsche Bank AG

FCA action

fines

4

in fines

£401.0m

most recent

January 2017

• Fined £163.08m on 31 January 2017

  The Financial Conduct Authority (the “FCA”) has imposed a financial penalty of  £163,076,224 on Deutsche Bank AG, FRN 150018, Winchester House, 1 Great Winchester Street, London EC2N 2DB. The FCA’s action took effect on 30 January 2017 and a copy of the Final Notice, which sets out the reason for the action, is displayed on the FCA's web site and can be accessed using the following link: https://www.fca.org.uk/publication/final-notices/deutsche-bank-2017.pdf The reason for this action is that Deutsche Bank AG failed to take reasonable care to organise and control its affairs responsibly and effectively and to establish and maintain an effective anti-money laundering control framework in its Corporate Banking & Securities (CB&S) division in the UK during the period between 1 January 2012 and 31 December 2015.

• Fined £226.8m on 23 April 2015

  Summary of FCA action against Deutsche Bank 1. On 23 April 2015 the FCA (“Authority”) imposed a penalty of £226,800,000 on Deutsche Bank in accordance with section 206 of the Financial Services and Markets Act 2000. The fine was imposed for Deutsche Bank’s breaches of Principles 5, 3 and 11 through misconduct relating to its submissions of rates which formed part of the London Interbank Offered Rate (“LIBOR”) and the Euro Interbank Offered Rate (“EURIBOR”).   2. Deutsche Bank settled during Stage 1 negotiations and therefore qualified for a 30% discount. Were it not for this discount, the fine would have been £324,000,000.   3. This memo is a brief summary of the case only. For a full and complete account please consult the Final Notice of 23 April 2015 which is published on the FCA website at http://www.fca.org.uk/static/documents/final-notices/deutsche-bank-ag-2015.pdf     Particular breaches committed by Deutsche Bank   Attempts to manipulate LIBOR and EURIBOR rates (Principle 5)   3. Between January 2005 and December 2010 (“Principle 5 Relevant Period”), Deutsche Bank acted improperly and breached Principle 5 by failing to observe proper standards of market conduct. LIBOR and EURIBOR submissions made by Deutsche Bank were manipulated for the purpose of benefiting Deutsche Bank’s trading positions.   4. In total, this misconduct involved at least 29 Deutsche Bank individuals including Managers, Derivative Traders and Submitters, primarily based in London but also in Frankfurt, Tokyo and New York.       (a) Manipulation of Deutsche Bank’s submissions to benefit its trading positions   5. Derivatives Traders routinely made requests to Submitters with the goal of influencing Deutsche Bank’s Japanese Yen (“JPY”), Swiss Franc (“CHF”), US Dollar (“USD”) LIBOR and EURIBOR submissions during the Principle 5 Relevant Period.  In respect of Pounds Sterling (“GBP”) LIBOR requests were made to Submitters on occasion. Deutsche Bank’s Submitters routinely took the requests into account when making JPY, CHF, USD LIBOR and EURIBOR submissions and on occasion when making GBP LIBOR submissions. Deutsche Bank Submitters on occasions solicited requests from Derivatives Traders in advance of submitting the daily benchmark rates.   6. Deutsche Bank Submitters routinely took their own derivatives positions into account when making Deutsche Bank’s JPY, USD and GBP LIBOR submissions.       (b) Collusion and trading activity in an attempt to improperly influence the submissions of other Panel Banks   7. On occasions, Deutsche Bank EURIBOR Submitters would bid or offer in the cash market in response to requests from Derivative Traders for favourable submissions. The primary motivation was to influence the EURIBOR submissions of other Panel Banks and therefore move the final EURIBOR rate to benefit Deutsche Bank’s derivative positions. On occasion, Submitters were willing to offer cash at lower rates than they would normally do so to attempt to influence the EURIBOR submissions of other Panel Banks.   8. At various times between at least June 2005 and April 2007, A Deutsche Bank Manager colluded with other Panel Banks.  He routinely made requests to External Traders for high or low EURIBOR submissions. This Manager sought to influence the submissions of other Panel Banks with the aim that the final published EURIBOR rate would improve the profit or reduce the loss of his trading positions.   9. At various times between September 2008 and July 2009, a Derivatives Trader  colluded with an External Trader at a Panel Bank by making JPY LIBOR submissions which took into account requests made by the External Trader. The Derivatives Trader knew that in making requests to him, the External Trader was motivated by profit and seeking to benefit the External Trader trading positions.   10. In June and July 2009, a Derivative Trader and an external Trader colluded in an attempt to manipulate JPY LIBOR over a period of about 2 weeks.   11. On occasions between January 2008 and July 2009, Derivatives Traders made requests to Broker Firms. They did this to attempt to influence the LIBOR submissions of other Panel Banks through information disseminated by the Broker Firms as part of market colour they provide to their clients.      Systems and controls failings (Principle 3)   12. Between January 2005 and February 2013 (“Principle 3 Relevant Period”) Deutsche Bank breached Principle 3 due to its lack of systems and controls in relation to IBOR submissions and inadequate systems and controls around Trader misconduct.   13. Between January 2005 and June 2011, Deutsche Bank had no IBOR-specific systems and controls in place.   14. Deutsche Bank’s tape recording system used to record Traders’ telephone calls and Deutsche Bank’s systems for identifying which Traders were responsible for which trading books were systemically flawed.      Failures to deal with the regulator in an open and co-operative way, and failures to disclose to the appropriate regulator appropriately anything relating to the firm of which the regulator would reasonably expect notice (Principle 11)   15. Between 4 February 2011 and 31 May 2014 (“Principle 11 Relevant Period”) Deutsche Bank breached Principle 11 due to failing to provide information to the Authority; making inaccurate and misleading statements to the Authority; providing a false attestation to the Authority and; failures during the course of the Authority’s investigation.    16.     On 13 September 2013, the Authority’s Enforcement and Financial Crime Division was told by telephone that the BaFin did not approve at that time of DB sharing either copies or details of a third party review commissioned by the BaFin and relating to Deutsche Bank’s IBOR misconduct with the FCA. This message was substantially repeated in a call to the Authority’s Supervision Department on 16 September and in an email sent to the Authority on the same date. In fact, BaFin had given no indication that it in anyway disapproved of or restricted disclosure of the third party review to the FCA.   17. On 30 January 2014, the Authority extended the scope of its investigation to include Principle 11 issues, including whether or not the Authority had been misled regarding provision of the third party review.  A few days later, a Senior Deutsche Manager spoke to the Authority’s Director of Enforcement and represented that Deutsche Bank’s Attendance Note of the September Meeting substantiating its position on non-disclosure was precise, contemporaneous and reliable. Following this the Senior Manager discovered that his representations concerning the Attendance Note may have been misleading but took no steps to contact the Authority to correct or qualify them.   18. On 18 March 2011 Deutsche Bank submitted to the Authority an attestation which was false in various respects, known at the time to a Compliance Officer at Deutsche Bank with responsibility for drafting the attestation.   19. During the course of the Authority’s investigation Deutsche Bank failed to deal appropriately with information relevant to the investigation in the following respects:  failing to give accurate information to the Authority regarding audio recordings; failing to produce documents in an appropriate timeframe and; destruction of documents subject to the Authority’s preservation notice.

• Fined £4.72m on 28 August 2014

  The Financial Conduct Authority (the FCA) has imposed on Deutsche Bank AG (Deutsche) a financial penalty of £4,718,800 in respect of breaches of SUP 117. The breaches involved a failure to accurately report to the FCA the CFD Equity Swap transactions executed by Deutsche. The FCA's action took effect on 28 August 2014 and a copy of the Final Notice, which sets out the reason for the action, is displayed on the FCA's web site and can be accessed.

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