FCA Fines Former Deutsche Bank Trader £180,000, Issues Indefinite Ban

The FCA has issued a monetary fine of £180,000 and placed an indefinite ban on former Deutsche Bank short-term interest rate derivatives trader Guillaume Adolph.

The penalties decided following a long-running investigation into the actions taken by Mr. Adolph during his time with the German lender.

The Scope of the Violations

Based on the assessment of the FCA, the scope of Mr. Adolph’s violations pertains to misconduct taking place between July 25, 2008 and March 11, 2010.

There are three underlying violations that stand out in the FCA’s official statement. The first violation discusses instances in which Mr. Adolph requested a readjusted submission from Deutsche Bank’s CHF Libor Libor Libor stands for London Inter-bank offered rate. It is an industry-specific term which most of us would never have heard of until the "Libor scandal" became popularized in 2012. Libor is considered to be one of the most important interest rates in finance, upon which trillions of financial contracts rest. The Libor rate effects over $800,000,000,000,000 in financial deals. Banks simply cannot lend money to one another whenever they like as there is a system in place. Every day a group of leading Libor stands for London Inter-bank offered rate. It is an industry-specific term which most of us would never have heard of until the "Libor scandal" became popularized in 2012. Libor is considered to be one of the most important interest rates in finance, upon which trillions of financial contracts rest. The Libor rate effects over $800,000,000,000,000 in financial deals. Banks simply cannot lend money to one another whenever they like as there is a system in place. Every day a group of leading Read this Term Submitters in an effort to benefit his own trading positions.

Another case of conflict of interest arose when Mr. Adolph placed consideration in his own trading positions when serving as the primary JPY LIBOR submitter for Deutsche Bank.

In a presumably mutually beneficial relationship, it was also proven that Mr. Adolph “improperly agreed” to make JPY LIBOR submissions, taking into account the requests of a trader from another bank.

Deutsche Bank’s Misconduct Issues Persist

The accusations against Mr. Adolph culminated in the aforementioned FCA-issued fine, coupled with his banning from partaking in the financial services industry. The punishments were issued very late relative to the violations, as other large-scale scandals have been plaguing the German financial services provider.

Just last month, Deutsche Bank was ordered to pay $70 million for its attempts to manipulate USD swap rates to benefit its personal positions. The order was issued by the Commodity Futures Trading Commission (CFTC CFTC The 1974 Commodity Exchange Act (CEA) in the United States created the Commodity Futures Trading Commission (CFTC). The Commission protects and regulates market activities against manipulation, fraud, and abuse trade practices and promotes fairness in futures contracts. The CEA also included the Sad-Johnson Agreement, which defined the authority and responsibilities for the monitoring of financial contracts between the Commodity Futures Trading Commission and the Securities and Exchange Commiss The 1974 Commodity Exchange Act (CEA) in the United States created the Commodity Futures Trading Commission (CFTC). The Commission protects and regulates market activities against manipulation, fraud, and abuse trade practices and promotes fairness in futures contracts. The CEA also included the Sad-Johnson Agreement, which defined the authority and responsibilities for the monitoring of financial contracts between the Commodity Futures Trading Commission and the Securities and Exchange Commiss Read this Term).

In a similar case, the German lender reached a settlement to pay $190 million, for its role in a US FX rigging lawsuit. The turmoil surrounding Deutsche Bank has taken priority over other cases. The case involving Mr. Adolph has only now been resolved.

Deutsche Bank’s down year culminated in recording a yearly loss for 2017. The US Tax Cuts and Jobs Act of 2017 caused a massive non-cash tax charge of €1.4 billion, which demolished the bank’s yearly results.

Deutsche Bank Looking Ahead

Deutsche Bank is looking ahead toward improving recent negative sentiment, as well as its bottom line figures. Deutsche has initiated layoffs in both London and New York in an effort to cut some of its overheads.

Moreover, the bank has also announced an IPO of its asset management business in an effort to obtain an influx of capital. Current estimates suggest that Deutsche Bank will attempt to raise €1.5 billion to €2 billion ($1.85 billion to $2.47 billion), by listing roughly 25% of its DWS shares in the sale.