Benchmark Rigging: Deutsche Bank to Pay $170M Over Euribor Fixing Allegations, UK Court Agrees to Hear Libor Swaps Case Against RBS, and Ex-Barclays, Citigroup, and JPMorgan Traders to Face Currency Manipulation Charges in the US
Deutsche Bank Settle Investor Lawsuit Over Euribor Rigging
Deutsche Bank AG (DB) has agreed to pay $170M to resolve an investor fraud lawsuit accusing the German lender of conspiring with other banks to rig Euribor and other derivatives. Euribor is the European Interbank Offered Rate benchmark and the euro-denomination equivalent of Libor, which is the London Interbank Offered Rate.
FrontPoint Australian Opportunities Trust and the California State Teachers Retirement System (CalSTRS) are two of the plaintiffs in the Euribor rigging case against Deutsche Bank. However, the bank, despite settling, is not denying or admitting to wrongdoing. It claims to have decided to resolve the case to avoid more lawsuits and further costs.
A preliminary settlement has been submitted in the U.S. District Court in Manhattan. Now, a judge must approve the deal.
Investors have accused a number of banks of conspiring with each other from 6/2005 to 3/2011 to manipulate Euribor and fix prices of derivatives that are based upon Euribor. Other banks which have settled Euribor rigging allegations are HSBC Holdings Plc. (HSBA.L) for $45M and Barclays Plc. (BARC) for $94M. Both settlements have won preliminary court approval.
UK Appeals Court to Hear the Libor Swaps Lawsuit Against Royal Bank of Scotland
In the United Kingdom, the Court of Appeals in London will hear a landmark swaps suit accusing Royal Bank of Scotland PL (RBS) of misselling swaps connected to Libor.
The swaps misselling lawsuit is Property Alliance Group Ltd. v. The Royal Bank of Scotland PLC. The decision by the court to review the swaps misselling case comes after the High Court turned down plaintiff Property Alliance Group Ltd.’s efforts to appeal an earlier ruling, which dismissed the $38.7M securities fraud case. The company is accusing RBS of fraudulently selling it four-pound sterling-connected swaps trades between 2004 and 2008.
UK regulators fined RBS £87.5 pounds in 2013 for trying to rig the Swiss franc- and yen-linked Libor but not for Libor for the US dollar or for sterling. Property Alliance Group is trying to prove that the bank also rigged sterling Libor.
Some of the biggest banks in the world have been subject to fines collectively totaling billions of dollars for rigging Libor and other benchmarks to either benefit their trading books or make themselves look more financially robust.
Former UK Traders Will Face Currency Manipulation Charges in the US
Ex-Barclays (BARC) trader Christopher Ashton, former Citigroup (C) G-10 FX spot trading head Rohan Ramchandani, and ex-JPMorgan Chase (JPM) trader Richard Usher have agreed to waive extradition. They will travel to the US to appear in the Federal District Court in Manhattan in July. The former UK traders are criminally charged in the US for their alleged involvement in a conspiracy to manipulate forex markets. They allegedly conspired to rig bids involved in euro trading to the US dollar.
The three men are accused of belonging to “the Cartel,” which are a group of traders that colluded together through emails, chat rooms, and the phone to rig currency probes. Although British authorities ended their probe into currency rigging last year without bringing criminal charges against any individuals, US authorities have proceeded with their own criminal probes.
In January, ex-BNP Paribas (BNP) and Barclays trader Jason Katz pleaded guilty to a conspiracy charge in the US. Former HSBC executive Mark Johnson pleaded not guilty to conspiracy and wire fraud. Meantime, another ex-HSBC executive, Stuart Scott, continues to fight extradition that would bring him back to the US from the UK.
The SSEK Partners Group is an institutional investor fraud law firm. Our securities lawyers represent institutional clients and high net worth individual investors.
Deutsche Bank reaches $170 million Euribor-rigging settlement, Reuters, June 12, 2017
UK Appeals Court To Hear Landmark RBS Libor Swaps Suit, Law360, June 5, 2017
Ex-Traders in Britain to Face Currency-Rigging Charges in U.S., NY Times, June 13, 2017