Deutsche Bank AG (DB) has consented to pay $190M to resolve an investor fraud lawsuit accusing the German lender of manipulating prices in the foreign exchange market. Despite settling, however, the bank maintains that it did not engage in wrongdoing.
Investors accused Deutsche bank and 15 other banks of conspiring to rig key currency benchmark rates by coordinating strategies and sharing confidential trade information and orders. The bank’s traders are accused of meeting in chat rooms to engage in numerous tactics to make more profits regardless of whether or not this meant losses for investors.
Regulator probes into currency rigging have led to $10B in fines imposed against a number of big banks, including the most recent one by the Federal Reserve, which ordered HSBC to pay a $175M fine for not properly monitoring its currency traders. With the investor lawsuits, Credit Suisse Group AG (CS) is the only one of the banks sued by investors that has not settled.
Other big settlements include: $402M with Citigroup (C), $285M with HSBC, $384M with Barclays (BARC), and $255M with Royal Bank of Scotland (RBS). Settlements were also reached with UBS (UBS), Standard Chartered, Bank of America (BAN), BNP Paribas, JPMorgan Chase (JPM), Morgan Stanley (MS), Bank of Tokyo-Mitsubishi UFJ, Goldman Sachs (GS), Societe Generale, and Royal Bank of Canada. In total, the investor claims over currency rigging have rendered more than $2.3B in settlements.
HSBC Trader’s Trial To Resume
Meantime, the criminal trial of Mark Johnson will resume this week after the prosecutors rested their case. The former HSBC Holdings trader, who was the global head of the bank’s foreign exchange, is charged related to his alleged involvement in a trading scam that generated $8M for the bank. Johnson is accused of notifying traders globally about a $3.5B client order to purchase sterling.
Prosecutors claim that call recordings listened to by jurors are proof that Johnson tipped one trader in Hong Kong. The tip was spread and a bevy of trades ensuing.
Cairn, a corporate client, had retained HSBC to convert the money from a unit sale from dollars to pounds. Johnson called Cain to advise that a fix trade for making the currency transaction was the recommendation in part because of the transparency it provided. However, according to prosecutors, Johnson had been buying up pounds prior to the trade and notified other HSBC currency traders 90 minutes before its actual execution. Johnson, Scott, and other traders in New York and London made about $3M in profits for their trades.
Deutsche Bank Agrees to $190M Preliminary Settlement in Foreign Exchange Suit, New York Law Journal, September 29, 2017
HSBC Traders Used Code Word to Trigger Front-Running, U.S. Says, Yahoo, October 25, 2017
The SSEK Partners Group is an institutional investor fraud law firm. Contact us today to schedule your free case assessment.
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