Deutsche Bank Slapped with $156.6 Million Fine for FX Trading Violation

Deutsche BankDeutsche Bank AG has been slapped with a fine of $156.6 million by the US Federal Reserve for violating the foreign exchange regulations as a part of the settlement agreement. A fine of $136.9 million has been levied against the bank for not following the rules of currency trading.

A global level settlement pertaining to the broader investigation is being carried out into numerous large banks for colluding to rig the foreign exchange prices. As per the Federal Reserve, Deutsche Bank has failed to detect that the financial traders were using chat rooms for communication and setting up trades for manipulating the foreign exchange rates.

The bank has been imposed with an additional fine of $19.7 million for violating the “Volcker Rule” which prohibits banks from trading with federally insured funds. Under this rule, the compliance programs are mandatory but the bank has failed to set one up. This is the first time any bank has been fined under the “Volcker Rule” since its roll out in the year 2015.

The New York Times

Andreas Plaesier who is an analyst at M M Warurg has made the following statement:

It’s really surprising just how many controls failed across the bank in recent years and it doesn’t cast a good light on former management.

Renee Calabro, the spokeswoman for Deutsche Bank has said that the bank is pleased that the matter is settled and closed. Under the agreement with Federal Reserve, the bank has agreed to strengthen the monitoring of foreign exchange trading carried out by individual traders. In order to comply with the Volker Rule, the bank has to submit a plan within 60 days on the improvements.

The Fed settlement follows the investigation by a number of global regulatory authorities into charges that the global banks are working together for manipulating the prices of foreign exchange. Till date, 5 banks have pleaded guilty. Seven banks have paid the penalty amount amounting to over $10 billion to regulators in both Europe and the United States.

Other financial regulators like United Kingdom’s Financial Conduct Authority and Commodity Futures Trading Commission the Justice Department have dropped the cases against Deutsche Bank.

As per an internal source, the bank is still investigated by NY’s Department of Financial Services with related to charges that its automated trading platform was being used to manipulate currency prices.

Till date, Deutsche Bank has paid several billion dollars for settlement of large cases involving financial irregularities. The latest fine will put the firm at $14.7 billion since 2008; an amount which is considered to be the highest amongst all the European banks.


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