Deutsche Fined for Currency Failings -- WSJ

By Jenny Strasburg 

This article is being republished as part of our daily reproduction of WSJ.com articles that also appeared in the U.S. print edition of The Wall Street Journal (June 21, 2018).

New York's financial-services regulator said it fined Deutsche Bank AG $205 million over allegations it sought to manipulate currency prices and mislead clients while failing to protect confidential customer information.

The German lender agreed to the fine in a consent order with New York's Department of Financial Services. In a statement Wednesday, the regulator said Deutsche Bank traders and salespeople sought to skew foreign-exchange prices and charge excessive spreads. The regulator cited other control failures that it said had "the potential to improperly disadvantage customers and improperly affect markets."

The civil investigation covered the years 2007 to 2013, during which Deutsche Bank was the world's largest currency trader.

Deutsche Bank said the settlement is covered by existing legal provisions. In a statement, the bank said it "is pleased to resolve the NYDFS' investigation into historical practices relating to its FX business and that the NYDFS has recognized our extensive cooperation and remediation."

The settlement resolves the last active regulatory probe into Deutsche Bank currency-trading practices. The bank didn't admit or deny the findings of the investigation. The lender has paid a total of about $357 million to resolve currency-trading regulatory probes, including the New York fine announced Wednesday. By contrast, several other investment banks have paid more than $1 billion in fines each in various investigations in the U.S. and elsewhere.

One practice cited by the New York regulator was "jamming the fix," which involved Deutsche Bank traders improperly seeking to skew currency markets by accumulating large positions just before and after the window of time when currency prices were set.

Sales staff at the bank also took steps to shortchange customers by doctoring trade-execution markups or dicing up customer orders to keep portions of trades in the bank's own account, according to the regulator. The moves -- and failures to correct errors in record-keeping -- were aimed at boosting the bank's profits while filling client orders at sometimes less-favorable prices, the regulator said.

Deutsche Bank employees sought to manipulate currency benchmarks to benefit their trading profits, and swapped customer identity and order information with competitors in ways that allowed traders to collude, the Department of Financial Services said.

The bank agreed to provide the regulator with plans to improve compliance and internal auditing.

Write to Jenny Strasburg at [e-mail]

(END) Dow Jones Newswires

June 21, 2018 02:47 ET (06:47 GMT)

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