Unprepared at Deutsche |Bank for Doomsday, Feds Say

     (CN) — U.S. regulators cracked the whip on Deutsche Bank over a five-day systems outage, saying the beleaguered German lender is supposed to be prepared for such disasters.
     Deutsche Bank’s swap-data-reporting system crashed four months ago on April 16.
     Filing suit Thursday in Manhattan, the Commodity Futures Trading Commission says “Deutsche Bank’s subsequent efforts to end the system outage repeatedly exacerbated existing reporting problems and often led to the discovery or creation of new reporting problems, many of which violate a previous CFTC order.”
     The CFTC imposed that order nearly a year ago over Deutsche Bank’s failure “to properly report its swaps transactions from in or about January 2013 until July 2015 “
     Though that order demanded creation a viable disaster-recovery plan, the CFTC says Deutsche Bank apparently dropped the ball again.
     “In fact, Deutsche Bank could not implement the disaster recovery plan at all in response to the system outage because the first step in the disaster recovery plan required switching from the main platform to the disaster recovery platform, which housed the corrupt files, and initiated the failure,” the new complaint states.
     Tens of thousands of futures swap messages remain unreported due to the technical malfunction, regulators say.
     The CFTC wants a federal judge to install a monitor who will ensure the bank’s compliance with reporting requirements. It also wants $140,000 for each violation.
     Other legal woes already plague Deutsche Bank. The German lender’s 2016 second-quarter net income fell 98 percent from a year prior, as it has been hit hard by regulatory fines.
     Last year, Deutsche Bank reached a record $2.5 billion settlement with U.S. and U.K. regulators concerning manipulation of Libor, short for London interbank offered rate.
     The bank was also one of 10 banks that paid $1.86 billion last year to settle antitrust claims related to transparency in the credit-default swap market.
     A securities fraud class action against the bank meanwhile remains pending — accusing the bank of misleading shareholders on $5.4 billion worth of subprime securities.
     CFTC Director of Enforcement Aitan Goelman said in a statement: “Deutsche Bank’s repeated violations warrant the intervention of a Court-appointed monitor. Deutsche Bank has shown over the last year its inability to comply with its swap reporting responsibilities under the Commodity Exchange Act and CFTC Regulations. The CFTC treats these failures seriously and will take appropriate steps to ensure compliance.”
     Deutsche Bank is cooperating with the agency.
     “We understand the concerns raised by the CFTC and have agreed on steps to resolve this matter,” Deutsche Bank said in a statement. “We continue to work on enhancing our reporting systems, and we are committed to meeting all regulatory requirements.”

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