Authorities announced that Germany's biggest bank, Deutsche Bank would
pay $2.5 billion in penalties, a record for cases involving interest rate
fraud, which have already targeted banking behemoths like Barclays and UBS.
Officials said the wrongdoing at Deutsche Bank lasted from 2005 to 2011 and
touched employees in London, Frankfurt, New York, and Tokyo.
The New York Times reports that Deutsche Bank "also
agreed to accept a criminal guilty plea for the British subsidiary at the
center of the case. It is the most significant banking unit to accept a
criminal plea in the long-running investigation into the manipulation of the
London interbank offered rate, or LIBOR." The LIBOR rate is an average of
what banks charge for lending to each other. In addition, it sets a benchmark
for interest rates for trillions of dollars' worth of loans around the
world—from mortgages and student loans to credit cards and complex derivatives.
The penalty follows a seven-year investigation into how some of the world's
largest financial institutions secretly conspired to rig benchmark interest
rates to their benefit.
"Law enforcers found repeated examples of manipulation
as they investigated the bank," said Bartlett Naylor, financial policy
advocate in Public Citizen's Congress Watch Division "For example, they
discovered pervasive fraudulent practices where traders gave false information
about rates at which they borrowed or loaned money with other banks," he
said. "That established false benchmarks on which other rates were based.
That harms average Americans when they agree to mortgages. Law enforcers also
found that Deutsche Bank withheld and even destroyed information about the
investigation. Yet, surprisingly, despite the severity of these offenses, the
government concluded that these crimes should be punished only through a
financial penalty."
Many of the traders responsible for the frauds remain
employed at Deutsche Bank. Insider trading in individual stocks seems minute in
comparison, yet many people have been jailed for 10 years or more. The case
spotlighted the collusive elements of Wall Street trading desks, where rival
banks have occasionally joined forces to manipulate financial benchmarks. It
also foreshadows looming actions against banks suspected of teaming up to
manipulate the price of foreign currencies
1 comment:
if all criminals need to be locked up, then its jail time for them.
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