The Commodity Futures Trading Commission (CFTC) today settled two cases with Germany’s biggest lender and its securities arm, ordering Deutsche Bank to pay over $10 million.
The first order imposes a $9 million civil monetary penalty on Deutsche Bank as a five-day systems outage in 2016 revealed the German lender was unprepared for such disasters, the CFTC said Thursday.
The agency’s order forced the bank to comply with remediation efforts, including beefing up reporting requirements and submitting periodic updates. Deutsche Bank AG also agreed to appoint an independent monitor after the CFTC said its swaps data reporting system is rife with problems and violates an agreement the bank and the watchdog reached before.
The CFTC filed its suit in New York federal court alleging that the system outage occurred in April 2016 prevented the bank from reporting swap data for multiple asset classes for five days. The US derivatives watchdog also found the data Deutsche Bank managed to submit was incomplete and ‘untimely,’ as it failed to supervise the staff responsible for the swaps data reporting. It was also alleged the German lender did not have adequate ‘business continuity and disaster recovery plans’.
Deutsche Bank disgorges over $M in a spoofing case
Deutsche Bank was fined $2.5 million in 2015 for similar lapses after the CFTC said it failed to properly report swaps transactions over a period of 18 months.
Separately, the CFTC settled a spoofing case with Deutsche Bank Securities Inc. (DBSI), who the agency said its traders made profits by entering spoofing orders in Treasury and Eurodollar futures contracts traded on the Chicago Mercantile Exchange (CME).
Two Tokyo-based traders at DBSI on numerous occasions placed orders to buy or sell futures contracts with the intent to cancel those orders before they were executed. The spoofing scheme ran from at least January 2013 through December 2013 and focused on currency contracts listed on the CME futures market.
In settling the CFTC case, Deutsche Bank will pay $1.25 million, although it didn’t admit or deny the agency’s allegations. The CFTC also credited Deutsche for its cooperation since learning of the traders’ misconduct, which the regulator says it expedited the resolution of this matter and reduced the monetary penalty.
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