This page has been archived and commenting is disabled.

Deutsche Bank CEO May Have Lied To Bundesbank About Rate Rigging, BaFin Says

Tyler Durden's picture




 

A lot has transpired at Deutsche Bank over the last three months. Let’s recap. 

In April, Deutsche settled rate rigging charges with the DoJ for $2.5 billion (or about $25,474 per employee). A month later, the bank paid $55 million to the SEC (an agency that’s been run by former Deutsche Bank employees and their close associates for years) in connection with allegations it deliberately mismarked its crisis-era LSS book to the tune of at least $5 billion. On May 8, the bank’s head of structured finance Elad Shraga — who was instrumental in helping Deutsche become "an award-winning arranger of asset- and mortgage-backed debt — left the firm after 15 years. Then on June 5, US Attorney General Loretta Lynch announced the Justice Department would pursue new settlements with European banks over crisis-era MBS sales. Four days later, the bank’s headquarters were raided by authorities in connection with possible client tax evasion and on June 15, the firm’s global head of commercial real estate, Jonathan Pollack, defected to Blackstone. 

Oh, and both CEOs resigned on June 7. 

Now, Germany’s financial regulator says departing co-CEO Anshu Jain may have lied to the Bundesbank about LIBOR manipulation when he apparently denied having any knowledge of rumors that the fixes may have been fixed (so to speak) even as his inbox told a different story. FT has more:

Deutsche Bank’s senior management allegedly acted “negligently” over the fixing of Libor rates and Anshu Jain, its outgoing joint leader, may have lied to the German central bank, the country’s financial regulator concluded in a recent report that leaves Deutsche vulnerable to further action by authorities.

 

One of the bank’s biggest clients, Pimco, the asset management group, also lost out when one of Deutsche’s traders attempted to manipulate Isdafix, a key derivatives benchmark whose potential rigging is being investigated by US watchdogs.

 

The explosive conclusions are contained in a report into Libor-manipulation by BaFin, the German financial regulator, which has been seen by the Financial Times. It concludes that special “banking supervisory measures” should be considered for Deutsche.

Amusingly, BaFin says it was “astonished” to learn that anyone thought Anshu Jain had been cleared of wrongdoing:

“I have been astonished to learn [...] that the suggestion is that the audit by BaFin supposedly resulted in clearing the senior management of DB, especially Mr Jain, and that supposedly no banking supervisory measures are expected,” wrote Frauke Menke, head of banking supervision at the German watchdog, in the report, which was not made public. “I expressly want to point out that this is not correct.”

 

Mr Jain, who stepped down as joint chief executive earlier this month, is suspected by BaFin of having “knowingly made inaccurate statements” in a 2012 interview with Germany’s Bundesbank about the benchmark-setting process. He is accused of telling the central bank he had no knowledge of rumours of possible rigging in 2008, but contemporaneous emails about a meeting on the subject were forwarded to him at the time.

 

“I consider the failures with which Mr Jain is charged to be serious,” Ms Menke wrote, alleging that he created an environment “which favoured behaviour involving the exploitation of conflicts of interest”

 

Mr Jain oversaw a reorganisation in London that involved traders and submitters sitting together and sharing information, according to the report.


The report does not conclude that the management board directly knew of or ordered Libor rigging by the bank’s traders, nine of whom are named in the report. It is understood that the bank will dispute several of BaFin’s concerns, including that Mr Jain may have deliberately misled the Bundesbank or been responsible for the seating-plan reorganisation.


The report also raises the spectre of Isdafix for the bank: BaFin found that a New York-based trader tried to rig Isdafix in 2010 in order to bolster the value of an option at the expense of Pimco. It was only when the fund manager complained that the matter surfaced, resulting in an undocumented verbal warning, according to BaFin.

 

Deutsche then took another four years to cut the bonus of the trader in question, according to the report. It was Mr Jain who headed the relevant division at the time, BaFin adds.

Got it.

So basically BaFin thinks Anshu Jain might have known his traders were manipulating LIBOR and also might have taken around a half decade or so to punish a trader who PIMCO apparently caught manipulating IR swaps.

While none of this should come as any surprise to anyone, what is disconcerting — if you're a shareholder anyway — is that there doesn't seem to be a light at the end of the tunnel here when it comes to allegations, investigations, litigation, and fines. Having already shelled out some $9 billion over three years for legacy litigation, and with key employees defecting like rats from a sinking ship, one is certainly left to wonder if the firm is essentially rotting away at the core. 

 

- advertisements -

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
Fri, 06/26/2015 - 18:25 | 6239476 Money Boo Boo
Money Boo Boo's picture

Too White to Lie !!!!!!!!!!!!

Fri, 06/26/2015 - 18:34 | 6239515 Eireann go Brach
Eireann go Brach's picture

He will now be promoted to head the German Central Bank, as lying is a great quality in Central Banking circles.

Fri, 06/26/2015 - 18:47 | 6239553 El Oregonian
El Oregonian's picture

Banksters lie? Say it ain't so!

Fri, 06/26/2015 - 20:02 | 6239815 NoDebt
NoDebt's picture

Once they start lying they never ever EVER STOP.  All of these cocksucking motherfuckers knew what their "traders" were doing.  How do you think they could find some "lone, rogue trader" to throw under the bus to avert suspicion so quickly?

Fri, 06/26/2015 - 20:13 | 6239850 philipat
philipat's picture

I thought it was a European tradition, as in "When it gets difficult you have to lie"?

Fri, 06/26/2015 - 21:09 | 6240020 BurningFuld
BurningFuld's picture

Should have used Blackberry messanger. Rookie!

Fri, 06/26/2015 - 23:03 | 6240321 OC Sure
OC Sure's picture

Rate rigging from counterfeiters! Oh, really?

Sat, 06/27/2015 - 07:13 | 6240794 julian_n
julian_n's picture

Combined with an account on clintonmail.com

Fri, 06/26/2015 - 23:08 | 6240340 Little Doll
Little Doll's picture

I just started 6 weeks ago and I've gotten 2 check for a total of $2,200...this is the best decision I made in a long time! "Thank you for giving me this extraordinary opportunity to make extra money from home. This extra cash has changed my life in so many ways, thank you!" www.earnmore9.com

Fri, 06/26/2015 - 18:26 | 6239482 trader1
trader1's picture

Deutsche Bank going to be nationalized or allowed to collapse?

Fri, 06/26/2015 - 18:50 | 6239561 DetectiveStern
DetectiveStern's picture

IMF bailout for Germany LOL

Fri, 06/26/2015 - 19:05 | 6239562 ThroxxOfVron
ThroxxOfVron's picture

"Deutsche Bank going to be nationalized or allowed to collapse? "

 

You have it 100% backwards.  

The question is: will the Citizenry of Germany ( and by extension the whole of Europe via the ECB -and possibly the Citizenry of the US via The FED ) be corporatized and effectively raided/sacked//indebted for multiples of it's GDP by a purposefully management hollowed-out 'privately' owned Deutche Bank.

Fri, 06/26/2015 - 22:01 | 6240165 Tall Tom
Tall Tom's picture

Douche Bunk is toast. That is not all of the damage which they have done.

 

That is not the only lie they have told.

 

While the Greece Fire will be unextinguihable the real fuel for the Inferno is OIL...OIL Derivatives.

 

Cook yer Frankfurters. Duhayz good fer ya'all.

Fri, 06/26/2015 - 18:31 | 6239486 ZH Snob
ZH Snob's picture

exaggeration, perhaps?  lie is such a strong word.  after all, we're civilized gentlemen.  we learned our civilized ways from the British, Jain claims.

Fri, 06/26/2015 - 18:29 | 6239493 q99x2
q99x2's picture

Dude is a bankster. That's what banksters do.

Fri, 06/26/2015 - 18:49 | 6239558 RhoneGSM
RhoneGSM's picture

Copyright that! You just wrote the next Geico commercial!

Fri, 06/26/2015 - 18:32 | 6239507 Oldwood
Oldwood's picture

Bankers lying to bankers. What is the world coming to?? Is there no honor amongst thieves??

Fri, 06/26/2015 - 18:34 | 6239512 kowalli
kowalli's picture

no, they are backstabbing bitches

Fri, 06/26/2015 - 20:22 | 6239872 Ban KKiller
Ban KKiller's picture

What bag? I'm not holding any bag. In fact, when the bag is found I won't be working here. So ha, fucking ha! 

Fri, 06/26/2015 - 18:32 | 6239509 commishbob
commishbob's picture

Methinks we're supposed to put on our "surprised faces." 

Fri, 06/26/2015 - 22:03 | 6240176 Tall Tom
Tall Tom's picture

I am Jack's total lack of surprise.

Fri, 06/26/2015 - 18:35 | 6239518 knukles
knukles's picture

Off to Merkel's Odin Bedroom for Him!

Fri, 06/26/2015 - 18:59 | 6239588 nmewn
nmewn's picture

lol...news flash, bankers & pols lie, often.

In other news, Justice Roberts will teach creative writing classes at Harvard Law ;-)

 

Fri, 06/26/2015 - 18:52 | 6239566 Feel it Reel it
Feel it Reel it's picture

Lawyers protect the Bankers...The Bankers fund the Lawyers... The Lawyers are the Politicians....very simple to understand...

Fri, 06/26/2015 - 19:05 | 6239610 WTFUD
WTFUD's picture

What the falkirk was he supposed to do? Tell the truth and lose his brakes on that tight bend on the way home. Die Bundesbank like the BOE like the Paymaster General FED are conducting the Orchestra as we reach the crescendo. I know nuffink! yeah right.

Fri, 06/26/2015 - 19:10 | 6239640 chisler
chisler's picture

It would appear that the German fin sector is at the heart of all financil evil, or maybe they are just the test lab for this shit.

Make them bail out Greece as punishment.

Fri, 06/26/2015 - 20:23 | 6239873 Ban KKiller
Ban KKiller's picture

The real questions is do  banksters EVER tell the truth? 

Fri, 06/26/2015 - 21:17 | 6240043 logicalman
logicalman's picture

If one ever did, now THAT would be newsworthy!

 

Sat, 06/27/2015 - 00:56 | 6240516 Yen Cross
Yen Cross's picture

 I hope " Douche Bank" is forced to become a Credit Union... I want front row tickets to the hangings.

Sat, 06/27/2015 - 05:35 | 6240737 williambanzai7
williambanzai7's picture

Of course he lied, just like they all do.

Sat, 06/27/2015 - 08:02 | 6240829 WTFUD
WTFUD's picture

Section 1 of the Banking Exam involves passing a Lie Detector Test.

Sat, 06/27/2015 - 11:19 | 6241287 dogbert8
dogbert8's picture

And we're surprised how . . . ?

Sat, 06/27/2015 - 16:05 | 6242149 Dien Bien Poo
Dien Bien Poo's picture

A lying Indian at Deutsche Bank. Hes in good company. 

Do NOT follow this link or you will be banned from the site!