The New York Department of Financial Services (DFS) has fined the bank for unlawful, unsafe and unsound behaviour in its foreign exchange trading business
Deutsche Bank agreed to pay the fines for violations of New York banking law that included, among other things, skewing prices and misleading customers.
The violations were discovered during a DFS investigation, which found that the bank had acted improperly between 2007 and 2013, during which time it was the largest foreign exchange dealer in the world.
The behaviour by traders included use of multi-party chat rooms to coordinate activity and share confidential information, misleading customers on benefits of the bank, and manipulating foreign exchange currency prices and benchmark rates.
“Due to Deutsche Bank’s lax oversight in its foreign exchange business, including in some instances, supervisors engaging in improper activity, certain traders and salespeople repeatedly abused the trust of their customers and violated New York State law over the course of many years,” said DFS superintendent Maria Vullo.
She added that inadequate supervision could pose risks to the “soundness of an institution” and that compliance failures can lead to procedures harmful to customers and markets.
Vullo added that she appreciated the bank’s full cooperation and its internal investigation.
The bank will now provide plans on enhanced internal controls, an internal audit and a compliance risk management program in regards to its foreign exchange trading business.
In April, Mark Johnson, former head of HSBC Bank foreign exchange cash trading in the US became the first person to be imprisoned as part of a global crackdown on currency rigging.
