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Nothing To See Here: German Regulator Decides Deutsche Bank CEO Didn't Know About LIBOR After All

Tyler Durden's picture




 

A little over a week ago in "Deutsche Bank Stunner: An Inside Look At Former CEO’s Role In Liborgate," we presented lengthy passages from a report sent to the bank by BaFin, Germany's financial "watchdog". 

The document contains voluminous evidence which suggests that not only did Anshu Jain (who stepped down last month), know full well that his traders and submitters were likely involved in manipulating LIBOR fixes, but it was in fact Jain who "reorganized the seating order in the trading division in London in the year 2005, which resulted in traders and submitters sitting together, [in order] to achieve an open communication between both functions, especially also with regard to the LIBOR."

The report goes on to describe the relationship between Jain and Christian Bittar, the bank’s rate rigger par excellence, who the former CEO described as one of "the best people we’ve got."

As bad as all of this is, the particularly egregious - according to BaFin anyway - part of the review revolves around statements Jain made to The Bundesbank. In short, BaFin suggested that Jain may have lied about when he first discovered that LIBOR was being manipulated. In fact, according to what Jain told the central bank, Zero Hedge knew about LIBOR rigging two years before he did even though he himself made the seating chart which placed traders next to submitters! 

From BaFin:

There is suspicion that Mr. Jain might have knowingly made incorrect statements in his IBOR related Interview with the Deutsche Bundesbank on 5 October 2012. Mr Jain stated in this interview that he started having doubts about the fixing of the LIBOR for the first time in the first quarter of 2011 and that, in 2008, he had no knowledge about the LIBDR discussions.

Yes, "there is suspicion." That suspicion stems from this:

Mr. Jain had been informed already in 2008 about the discussions in the market relating to the susceptibility of the LIBOR to manipulation.

 

Mr. Falssola reported to Mr. Jain for the first time, according to the information available to EY about LIBOR submissions which deviated from the market by e-mall dated 21 August 2007.

 

In an e-mail dated 7 March 2008, Mr. Nicholls informed Mr. Jain, Mr. Cloete and Mr. Falssola that the Interbank markets were moving in a divergent direction and that there were banks which were trying to obtain liquidity for up to 50 basis points above the reference interest rate they had determined. The necessary conclusion based on this Information was that banks had reported reference rates which were too low.

 

An article appeared In the Wall Street Journal ("Bankers cast doubt on key rate amid crisis”) on 16 April 2008. In which there was a report about the concerns of market participants with regard to the reliability of the this involved and in one paragraph also the possibility of transmitting false Interest rates in order to profit from derivative transactions as well as the possibility of collusion among banks.

 

This was followed by e-maii communications concerning this WSJ article between Mr. Boaz Weinstein and Mr. Alan Cloete; Mr. Cloete stated that the LIBOR no longer represented a realistic ratio.

 

The discussion about the calculation of the LIBOR that made the rounds in the market following the WSJ article was the subject of two e-mails from Mr. Cloete to Mr. Jain on 20 April 2008 and 15 May 2008: Mr. Cloete referred in his e-malls to the rumors about the LIBOR noise about how libor noise around the LIBOR

This shows that Mr. Jain was informed about the LIBOR discussion in the market in the first half of the year 2008.

 

Mr. Jain has been proven to have learned about discussion in the market concerning the susceptibility of the LIBOR to manipulation in 2008.

So basically, Anshu Jain was personally responsible for a seating arrangement reorganization in 2005 which moved traders and submitters next to each other, was told that LIBOR submissions deviated from the market in a documented e-mail from 2007, and discussed a Wall Street Journal article about LIBOR with colleagues over e-mail in 2008. 

This led BaFin to conclude that "Mr. Jain has been proven to have learned” about LIBOR manipulation in 2008 despite the fact that Jain told the Bundesbank he had "no knowledge" of such things until at least 2011. 

Now BaFin says they were just kidding.

We present the following from Bloomberg with no further comment because frankly, given the above, there’s nothing left to say here:

German banking regulator Bafin cleared former Deutsche Bank AG co-Chief Executive Officer Anshu Jain of misleading the Bundesbank about his knowledge of the company’s role in attempts to manipulate benchmark interest rates.

 

"The suspicion that you made knowingly incorrect statements to a regulator seems unsubstantiated to me," Felix Hufeld, the president of Bonn-based Bafin, wrote in a letter to Jain seen by Bloomberg. "This aspect will therefore no longer be relevant in the continued assessment by Bafin."

 

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Sat, 07/25/2015 - 13:06 | 6353053 order66
order66's picture

And Dbank (bag) cards a Par.

Sat, 07/25/2015 - 13:17 | 6353105 HungryPorkChop
HungryPorkChop's picture

Yeah, but the real question is did he say that "before" or "after" putting down the crack pipe and morphine needle?  Because that really impacts whether the person was drugged or just in the process of shootin' up.  I'm sure they saw it the same way with D-Bank. 

We must assume the CEO still had the needle stuck in his arm and crack pipe in his mouth so he wasn't considered under the influence of drugs. 

Sat, 07/25/2015 - 13:18 | 6353111 Stackers
Stackers's picture

So what does a TBTF Bank CEO actually do ?

Sat, 07/25/2015 - 13:39 | 6353197 El Oregonian
El Oregonian's picture

They practice a form of "blind" justice? (Just us?)

Sat, 07/25/2015 - 13:39 | 6353199 PeaceLover
PeaceLover's picture

Steal

Sat, 07/25/2015 - 13:46 | 6353214 DeadFred
DeadFred's picture

And one regulator's name was just removed from the Ashley Madison data dump.

Sat, 07/25/2015 - 15:58 | 6353617 monad
monad's picture

Keep the real books. Verify the fake books pass scrutiny. Approve bribes and payoffs. Collect & catalog dirt.

Sat, 07/25/2015 - 13:10 | 6353070 fauxhammer
fauxhammer's picture

Nice putting, Sally

Sat, 07/25/2015 - 13:11 | 6353075 Joebloinvestor
Joebloinvestor's picture

You can almost bet one of these guys was on his knees facing the other.

Sat, 07/25/2015 - 13:13 | 6353088 Ignatius
Ignatius's picture

Of course he didn't know.  Everyone knows its common practice for junior partners to run their major corporations out on a wire.

Geez, does everything have to be explained?

Sat, 07/25/2015 - 16:37 | 6353741 logicalman
logicalman's picture

CEOs claim to be worth what they get paid.

If they are, then final responsibility rests with them.

Shouldn't be possible to have it both ways, but that's how the corrupt system we live inder works.

Sat, 07/25/2015 - 13:15 | 6353094 skbull44
skbull44's picture

And we are surprised?

http://olduvai.ca

Sat, 07/25/2015 - 13:16 | 6353101 Peter Pan
Peter Pan's picture

LIBOR stands for:

Lying
In
Big
Organizations
Repeatedly

Sat, 07/25/2015 - 13:28 | 6353113 SillySalesmanQu...
SillySalesmanQuestion's picture

Plausible Deniability
A condition in which a subject can safely and believeably deny knowledge of any particular truth that may exist because the subject is deliberately made unaware of said truth so as to benefit or shield the subject from any responsibility associated through the knowledge of such truth.

Or simply put, "I can't remember shit your honor...it wasn't me!"

WABOB!

Sat, 07/25/2015 - 13:28 | 6353158 To Hell In A Ha...
To Hell In A Handbasket's picture

When regulatory capture and fraud is part of the business model, our financial sector is what you see. Launder money for Hamas or Hezbollah, The Mexican drug Cartels, breaking U.S imposed financial sanctions by moving money for Iran for example, to then be fined on average 14% of the profits of the illegal trade, only a fool would not incorporate crime into the business model, especially on the understand NOBODY GOES TO FUCKING JAIL! If I had the regulatory body and spineless politicians’ in my back pocket, I would commit the same level of crime as the banksters with impunity. I would be a sanctimonious liar if I claimed otherwise. Who said crime doesn't pay?

Sat, 07/25/2015 - 13:31 | 6353170 mastersnark
mastersnark's picture

How many times are you going to get your hopes up that a rich person gets punished? Money is power is cliche for a reason.

Sat, 07/25/2015 - 13:32 | 6353174 Tinky
Tinky's picture

Six.

Sat, 07/25/2015 - 13:36 | 6353175 Closet Boy
Closet Boy's picture

This method is used by most criminals...

Adam - Admit nothing, deny everything, and make counter accusations.

 

"Learn it. Know it.  Live it." - Brad Hamilton, Ridgemont High

Sat, 07/25/2015 - 13:32 | 6353176 RaceToTheBottom
RaceToTheBottom's picture

It doesn't matter if the CEO knew of not.  That was the whole goal of Sarbanes Oxley.  Make them responsible for the financial performance of underlings.

Fuckwads make billions of dollars and then also get to use use the "I didn't know" defence?

Kill them all and then apologize for the 1% that are not guilty.

Mon, 07/27/2015 - 10:39 | 6358885 detached.amusement
detached.amusement's picture

 I think it mirrors this:  .01%

 

Sat, 07/25/2015 - 13:53 | 6353186 williambanzai7
williambanzai7's picture

Crooks Code...

They hand out all kinds of high fucking falooting bullshit about all the benefits of the giant TBTF universal banking model and global flow trading.

And this here is what it comes down to, rearranging the shitty trading deck chairs so the occupants are well positioned to schtup the bank's customers.

And yes, we bailed these fuckers out too. 

Sat, 07/25/2015 - 14:07 | 6353208 rwe2late
rwe2late's picture

He didn't know, nobody knew,

no one could have known,

it was an unknown unknown,

perhaps unknowingly done by some "invisible hand".

 

 

Sat, 07/25/2015 - 14:44 | 6353391 jmcadg
jmcadg's picture

Doesn't fill me with much 'hope and change' regarding the PM manipulation that BaFin have been quietly doing nothing on!

Sun, 07/26/2015 - 04:56 | 6355138 The Abstraction...
The Abstraction of Justice's picture

I wish I could say more but it would prejudice the appeal.

Sat, 07/25/2015 - 14:46 | 6353398 jmcadg
jmcadg's picture

Is he related to Corzine?

Sat, 07/25/2015 - 15:31 | 6353531 Never_Put_Down
Never_Put_Down's picture

I wonder how much that deal cost Jain

Sat, 07/25/2015 - 15:42 | 6353562 kchrisc
kchrisc's picture

See no Zion. Hear no Zion. Speak no prosecution.

Liberty is a demand. Tyranny is submission..

Sat, 07/25/2015 - 16:07 | 6353653 bentaxle
bentaxle's picture

Did BaFin give any indication of this guy's life expectancy?

Sat, 07/25/2015 - 17:50 | 6353957 falga
falga's picture

Bonus without any responsibility. Wonder why bankers are so loved?

Sun, 07/26/2015 - 04:49 | 6355135 The Abstraction...
The Abstraction of Justice's picture

The plods of BaFin must just love their CEO. 

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