Deutsche Bank Settles Interest-Fixing Claims for $220 Million

Deutsche Bank Settles Interest-Fixing Claims for $220 Million

Per the settlement, Deutsche Bank has agreed to pay $220 million, $213.3 million of which is to certain governmental and not-for-profit entities allegedly harmed by Deutsche Banks's conduct. Two years earlier, the bank paid almost $1 billion to resolve a European antitrust investigation into Libor.

From 2005-2010, a panel of 16 banks made USD LIBOR submissions that were supposed to reflect borrowing rates in the interbank market.

Government and nonprofit organizations in New Jersey will receive a portion of a $220 million settlement from Deutsche Bank that will resolve allegations of fraudulent and anti-competitive conduct.

Schneiderman said such conduct can interfere with or undermine confidence in financial markets.

"When institutions manipulate financial markets for their own self-serving, profit-driven reasons, they will be held accountable", Porrino said. The benchmark is then used as an index for trillions of dollars worth of loans, swaps, and other transactions. "The requested manipulation would either raise or lower Deutsche Bank's LIBOR submission in order to benefit the Deutsche Bank traders' positions at the expense of the bank's counterparties".

The investigation, conducted by a multistate working group of 45 state attorneys general led by the Attorneys General of New York, Connecticut, Maryland, Massachusetts, California and IL, revealed that Deutsche Bank manipulated LIBOR in a number of ways. At times, Deutsche Bank LIBOR submitters and supervisors expressly acknowledged and indicated they would work to implement the requests they received.

Furthermore, the AGs found that Deutsche Bank management and employees knew that its LIBOR submissions and other banks did not reflect the true borrowing rates.

Prior to the states' investigation, the bank launched two different internal probes to look into high profits that its trading strategy was yielding.

The fund will also be used to pay for the costs of the states' investigation.

Deutsche Bank cooperated with the states' investigation, according to the settlement agreement. Deutsche Bank employees did not disclose these facts to the governmental and not-for profit counterparties with whom Deutsche Bank executed LIBOR-referenced transactions even though these rates were material terms of the transactions.

Additionally, the AGs found that Deutsche Bank traders tried to influence the LIBOR submissions of other banks for its advantage.

New York Attorney General Eric Schneiderman said government entities and not-for-profit organisations across the United States were defrauded of millions of dollars when they entered into swaps and other financial contracts with Deutsche Bank without knowing that the Libor rate was being manipulated.

The New Jersey Attorney General's Office is part of a leadership group that's investigating LIBOR-related bank conduct that also includes officials from California, Connecticut, Florida, Illinois, Maryland, Massachusetts, and NY.

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