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Posted in:Banking and Finance|May 22, 2015 | Join the mailing list

Banks being fined is a regular news item and has been so since 2012 when the first LIBOR fine was imposed on Barclays.  Every few months a new fine is released, and they only seem to be increasing in size..

The latest round of fines has been in relation to Foreign Exchange and LIBOR.  Deutsche Bank received the largest, totalling £1.7 billion.  However, matters took a darker turn when one of the larger shareholders’ representative bodies has confirmed it wishes
to have a vote of no confidence in the bank’s board of directors.  This is in part because of the unrelenting and sizable fines being imposed on the bank.

The Bank has recently been fined USD $8.4 million by The Dubai Financial Services Authority.  The bank was fined for money laundering failures.  This has caused some consternation because the regulator had to issue Court proceedings following claims that Deutsche
Bank had misled it and had refused to deliver documents that it was required to provide.

In the LIBOR manipulation fines it was announced that traders had, literally, begged traders at other banks to unlawfully alter their LIBOR submissions so as to enable the bank to limit the rate of LIBOR (which would in turn make the bank a greater profit or
minimise a loss).  The US regulator confirmed that an email from a Deutsche Bank employee said in an email to a trader at another bank:

“I’m begging u, don’t forget me… pleassssssssssssssseeeeeeeeee… I’m on my knees…”

The FCA confirmed that Deutsche Bank’s fine was heavily increased because of “repeated” attempts by the bank to mislead the regulator, falsely claiming that the German financial authority had blocked the bank from disclosing information, and “accidentally”
destroying hundreds of tapes of phone call.  The statement by the FCA is similar to the statement by the Dubai regulator.  Unusually, the bank was also fined an additional $600 million by the New York Department for Financial Services, which did not fine the
other banks fined this week.

With such heavy criticism and evidence of illegality the bank and its senior employees Hermes Equity Ownership Services, which has a collective 5% stake in the bank, has called for a vote of no confidence.

If there are any issues in this update or more generally that you would like to discuss, please contact one of our Banking and Financial Regulatory team on 0161 833 9211.

(The information and opinions contained in this article are not intended to be comprehensive, nor to provide legal advice. No responsibility for its accuracy or correctness is assumed by Berg or any of its partners or employees. Professional legal advice
should be obtained before taking, or refraining from taking, any action as a result of this article.)

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