Deutsche Bank Fined $157MM After Its Traders Were Found To Still Use Chat Rooms To Rig FX Trading

Tyler Durden's picture

Another day, another fine for the bank that no matter what, just can't play by the rules.

On Thursday, the Federal Reserve fined Deutsche Bank $156.6 million for violating foreign exchange rules and running afoul of the Volcker Rule, suggesting it was likely trading FX out of its own account in violation of Dodd-Frank.

In levying the FX fine on Deutsche Bank, the Fed said it found "deficiencies in the firm's oversight of, and internal controls over, FX traders who buy and sell U.S. dollars and foreign currencies for the organization's own accounts and for customers."

Additionally, and stunningly, years after it became clear that FX chat rooms are about the worst possible idea for currency traders, the Fed said Deutsche Bank failed to detect and address that its traders were still "using electronic chatrooms to communicate with competitors about their trading positions." The order requires Deutsche Bank to improve its senior management oversight and controls relating to the firm's FX trading.

As further detailed in the C&D order, during the four year review Period:

  • Deutsche Bank lacked adequate governance, risk management, compliance, and audit policies and procedures to ensure that Deutsche Bank’s Covered FX Activities complied with safe and sound banking practices and applicable internal policies;
  • FX traders in the spot market at Deutsche Bank routinely communicated with FX traders at other financial institutions through chatrooms on electronic messaging platforms accessible by traders at multiple institutions;

Fed officials are "requiring the firm to cooperate in any investigation of the individuals involved in the conduct underlying the FX enforcement."

Having clearly learned its lesson - for real this time - Deutsche Bank said "we are pleased to resolve these civil enforcement matters with the Federal Reserve."

Separately, the Fed said it "found gaps in key aspects of Deutsche Bank's compliance program for the Volcker rule, which generally prohibits insured depository institutions and any company affiliated with an insured depository institution from engaging in proprietary trading and from acquiring or retaining ownership interests in, sponsoring, or having certain relationships with a hedge fund or private equity fund."

The Board also found that the firm failed to properly undertake certain required analyses concerning its permitted market-making related activities. The consent order requires Deutsche Bank to improve its senior management oversight and controls relating to the firm's compliance with Volcker rule requirements.

The FX violations were discovered during a four-year-old review of dealings at the bank, the Fed said in a consent order reached with Deutsche Bank.

Deutsche Bank has bank agreed to improve its oversight of foreign exchange trades as part of the agreement with the Fed.

We are "confident" this this will be the last time we ever hear of Deutsche Bank rigging markets and violating trading rules.

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order66's picture

Business as usual for Douche Bank.

NoDebt's picture

I'm so glad we bailed out the banks in 2008.  Aren't you?

 

remain calm's picture

I am sure the fine will stop them. Hey ass holes, put the mother fuckers in jail.Wait you wn't do that they give you money to run your campaigns. Go fuck yourselfs. All of bankers you just die and take all the politicians with you.

Pinto Currency's picture

.
What's the fine for the Bank of England for rigging global interest rates?

Cognitive Dissonance's picture

So what about the 'other' traders DB was communicating with?

chumbawamba's picture

Yes, because the first slap on the wrist just wasn't hard enough.  This one will sting though, and they will learn their lesson.

Your government at work for you.

I am Chumbawamba.

junction's picture

The next question is, who bails out America when it can't pay its debts?

Rich Stoehner's picture

AOL chat rooms still going strong!

Arnold's picture

I'm not getting your sarcasm ND.
Show us some of your insights.

Put that 20khat on and give us a bit of the non krugger you are.
Contrary insight is what we crave.\

And Brondo.

NoDebt's picture

OK, how about this for an answer...

Everything should be allowed to fail.  Many banks should have gone bust in 2008.  The ones that survived should have been busted up into smaller ones shortly thereafter.  The exact opposite of what happened.  

In nature do you know what happens to permanantly successful species?  They go extinct.  They multiply until they exhaust their food supply and they starve to death.

Unless you are willing to allow the just and the unjust to die indiscriminately, you are playing God.  Playing God has never worked out well for Man.  

The more you try to make something fail-proof, the harder it becomes, but also the more fragile it becomes.  The more fail-proof you try to make it, the more centralized the control must be to hold it in that position.  And in that process you introduce its greatest weakness- single point of failure.  And when that failure point is hit, the entire thing collapses catastrophically.

The more DE-centralized the control, the lower the likelihood that a failure in any given part will take down everything.

Does this mean I advocate anarchy?  Every man for himself?  Absolutely not.  I would just like to see the slightest nod from those in power that somebody other than myself understands the real risks they are taking by going too far in the direction of centralized control.  So far.... nothing.

 

pebblewriter's picture

If only central banks would stop rigging currencies, we might someday have actual markets again.

http://pebblewriter.com/sometimes-youre-the-bug/

hooligan2009's picture

you mean the Reserve Bank of Australia is a currency manipulator?

from here: http://www.rba.gov.au/mkt-operations/intl-mkt-oper.html

The Reserve Bank also transacts in the market to manage the currency risk on its portfolio of foreign currency assets. As discussed below, the foreign currency assets on the Bank's balance sheet are managed to a benchmark. In order to maintain the currency composition of these assets at, or within modest deviations from, their benchmark weights, the Bank regularly rebalances its foreign currency portfolio. These rebalancing transactions, and any transactions necessary to accommodate a change in the benchmark weights, involve the Reserve Bank operating in both the foreign exchange spot and swap markets.

 

Crawdaddy's picture

Man o man!

I'm starting to get the feeling this whole thing is simply a giant confidence game. Mysteriously rigged in favor of assholes, all of whom any decent person would naturally despise.

pebblewriter's picture

At least the RBA spells it out for us.  It's awfully easy to see the sticky fingers of the BoJ, Fed, ECB and SNB in the "markets" pretty much every day.  It seems to me this is one of those things that has Yellen so freaked out about an audit.

OCnStiggs's picture

"Douche Bank" needs to be SHUT DOWN.

holdbuysell's picture

Whew! I thought for an instant someone actually went to jail. But why go to jail when you can just print and pay? Someone should trademark that: P&P.

booboo's picture

sooner or later you would think the share holders would step in and intervene, same with UBS.

Ecclesia Militans's picture

This bank is setting a record for fines that should stand for a long long time.  Now see, if Corzine were in charge, things would be a little different....

Madcow's picture

Anyone caught not rigging FX markets will be considered a terrorist and raped in prison.

Making Merica Great Again's picture

Deutsche bank is the biggest douche in the finance biz

 

Some may even call it, Douche Bankk. You can't deny the name fits them

Uranium Mountain's picture

I thinking beatings are now in order.  

hooligan2009's picture

chat rooms are used by many traders at many institutions - DB  is only one - what about the rest - like JPM, C, GS, MS, HSBC, SGEN, BNP, RBC, RBS, BARC, CS, UBS, NOM, BTM etc etc

fining for using a chat room? front running or just chewing the fat?

ban facebook's yahoo's MSFT cell phone messengers, plus personal emails at work?

why didn't British, European or Japanese regulators pick this up? or is it not against the law to use chatrooms in those jurisdictions?

this mean DB is dead meat?

questions, questions, questions

PS, according to this, the UK was (still) almost twice as large as the US in fx trading of around 5 trillion bucks a day in April 2016

http://www.rba.gov.au/publications/bulletin/2016/dec/7.html

bentaxle's picture

It's true, I mean rigging the market was one thing. But when this guy from Deutsche told me he was itching to brush, ever so lightly, against his enter key for me, I knew he was really just some goose-stepping slut.

gdpetti's picture
Ronald Bernard High Finance Shocking Revelations (Dutch with Subtitles)

 

https://www.youtube.com/watch?v=nEpcY5JU120

Strelnikov's picture

Gee, another 2% charge to be cleared of repeated fraud worth billions.

 

That'll show them.

mosfet's picture

Deutsche Bank, "Was that wrong? Should I have not done that? Oopsie!"

Fed, "Here's a slap on the wrist.  Don't do it again...Wink, wink, Nudge, nudge."

// And still no multi-Billion fine for outright PM rigging that's gone on out in the open for decades.

zzzz88's picture

when central banks rigged the market, it is called moneytary policy; when DB rigged the market, they are fined; if you and I did not pay the tax, we are sent to jail. got it?

zzzz88's picture

when central banks rigged the market, it is called moneytary policy; when DB rigged the market, they are fined; if you and I did not pay the tax, we are sent to jail. got it?

zzzz88's picture

when central banks rigged the market, it is called moneytary policy; when DB rigged the market, they are fined; if you and I did not pay the tax, we are sent to jail. got it?

zzzz88's picture

when central banks rigged the market, it is called moneytary policy; when DB rigged the market, they are fined; if you and I did not pay the tax, we are sent to jail. got it?

zzzz88's picture

when central banks rigged the market, it is called moneytary policy; when DB rigged the market, they are fined; if you and I did not pay the tax, we are sent to jail. got it?

zzzz88's picture

when central banks rigged the market, it is called moneytary policy; when DB rigged the market, they are fined; if you and I did not pay the tax, we are sent to jail. got it?

zzzz88's picture

when central banks rigged the market, it is called moneytary policy; when DB rigged the market, they are fined; if you and I did not pay the tax, we are sent to jail. got it?

zzzz88's picture

when central banks rigged the market, it is called moneytary policy; when DB rigged the market, they are fined; if you and I did not pay the tax, we are sent to jail. got it?

Pumpkin's picture

Gee, the banks that steal the wealth of the people and nations cheat and lie?????  Who'd of thought????

 

  <Shock face>!!

man from glad's picture

When these white collar criminals begin to go to jail, only then will things change.

treefeller's picture

Isn't it time to revoke the charters of these false profits?

syzygysus's picture

Who went to jail? Oh nobody.

Fine paid with fiat fractional reserve notes. Snap snap! Moar printed!

FlKeysFisherman's picture

The best B movie ever made is called "Assault on Wall Street." Some guys wife dies due to lack of medical insurance and he buys a bunch of guns and mows down a couple dozen bankers.

Great stuff.

Here's a link if you're bored. Skip to the last 20 minutes for the good part.

https://gomovies.to/film/assault-on-wall-street-16526/

williambanzai7's picture

They are all grossly overpaid and in order to grossly overpay themselves they have to cheat and break the law. This is the essence of a TBTF bank like Douchebank.

Meanwhile they keep looking for creative ways to automate and lay off bank tellers. Get rid of the useless overpaid fucks upstairs!