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Wednesday, May 22, 2024 | Back issues
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Deutsche Bank Strikes Deal on Bribery & Price ‘Spoofing’ Charges

Pledging to pay $130 million, Deutsche Bank resolves claims that it fraudulently hid bribery payments and "spoofed" prices in the precious metals futures markets.

BROOKLYN, N.Y. (CN) — Deutsche Bank will pay more than $130 million as part of a Friday federal settlement to international bribery and corruption claims. 

In addition to alleging that the Frankfurt-based multinational investment bank concealed bribery payments to foreign officials as consultant fees, prosecutors describe a separate investigation into the bank’s manipulation of prices in the precious-metals futures market. 

The allegations are fleshed out in a 25-page deferred prosecution agreement  and a criminal information, both filed in the Eastern District of New York, charges Deutsche Bank with one count of conspiracy to violate accounting provisions of the Foreign Corrupt Practices Act of 1977 and one count of conspiracy to commit wire fraud affecting a financial institution. 

“Deutsche Bank engaged in a criminal scheme to conceal payments to so-called consultants worldwide who served as conduits for bribes to foreign officials and others so that they could unfairly obtain and retain lucrative business projects,” Acting U.S. Attorney Seth DuCharme said in a statement.  

The three-year resolution includes criminal penalties of more than $85 million, criminal disgorgement of $681,480, victim compensation payments of $1.2 million, and more than $43 million to be paid to the U.S. Securities & Exchange Commission in a coordinated resolution. 

Deutsche Bank spokesman Dan Hunter said the company fully cooperated with DOJ and SEC investigations and has taken “significant remedial actions” internally, including investing 1 billion euros ($1.22 billion) in response to the underlying compliance and operational issues. 

“While we cannot comment on the specifics of the resolutions, we take responsibility for these past actions, which took place between 2008 and 2017,” Hunter said in a statement Friday. 

According to the criminal information, Deutsche Bank falsely concealed bribes paid to a client’s decisionmaker in Saudi Arabia to retain that client’s business by recording the payments as “referral fees” paid to a business development consultant. 

Additionally, regulators alleged Deutsche Bank concealed millions of dollars of payments made to a proxy for a foreign official in Abu Dhabi by similarly recording those payments as “consultancy” payments to a business development consultant. 

The bank agreed to pay $79.5 million in relation to the concealment of bogus consultant fees paid in violation of Foreign Corrupt Practices Act count of the criminal information.  

Deutsche Bank also agreed to pay $7.5 million to resolve commodities fraud claims, which alleged that, between 2008 and 2013, Deutsche Bank precious metals traders in New York, Singapore and London placed orders to buy and sell precious metals futures contracts with the intent to cancel those orders before execution, as part of a scheme to manipulate prices on the New York Mercantile Exchange and Commodity Exchange. 

Outlawed by financial regulations under the Dodd-Frank Act, the trading practice known as “spoofing” uses complex computer algorithms to allow futures traders to manipulate markets by quickly placing and canceling orders, creating artificial supply or demand that tricks other traders into buying or selling. 

The resolution was confirmed at a 40-minute remote teleconference on Friday afternoon presided over by U.S. District Judge Rachel Kovner, a Trump appointee. 

Deutsche Bank’s latest settlement with federal regulators comes six months after it agreed to pay a $150 million fine for failing to flag suspicious cash withdrawals and legal settlements conducted on behalf of the late sex offender Jeffrey Epstein. 

Two years earlier, Deutsche Bank agreed to pay a civil monetary penalty of $30 million to settle similar allegations of spoofing prices of the precious metals futures market. 

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Categories / Business, Criminal, Financial

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