Deutsche Bank AG has agreed to pay $2.5 billion to settle U.S. and U.K. regulatory claims that it helped rig the London Interbank Offered Rate (Libor), the Euro Interbank Offered Rate (Euribor), and the Euroyen Tokyo Interbank Offered Rate (Tibor) between 2005 and 2011. The settlement is the latest and largest of numerous related settlements by other banks. Barclays settled in June 2012 for $450 million, UBS settled for $1.5 billion in December 2012, the Royal Bank of Scotland paid $612 million in February 2013, and Rabobank paid around $1 billion in October 2013. Deutsche Bank was forced to terminate seven employees as part of the settlement.
Libor, Euribor and Tibor, which underlie trillions of dollars in worldwide financial products, are set based by panels of major banks. The regulatory investigations have focused on whether banks intentionally rigged the rates to benefit the banks’ trading positions or to make the firms appear financially healthier than they actually were. The investigations uncovered numerous damning e-mails among traders from the banks in which the traders appeared to admit that they were manipulating the interest-rate benchmarks.
Although the settlement ends the regulatory investigations into Deutsche Bank’s involvement in rigging interest-rate benchmarks, as with many of the world’s largest banks, Deutsche Bank remains the subject of regulatory investigations involving the alleged manipulation of foreign exchange rates. Given that it appears that most major banks rigged interest rates, it is easy to believe regulators’ accusations that those same banks also manipulated foreign exchange rates.
Deutsche Bank and many of the other banks that were and are the subject of the above regulatory investigations and settlements remain the subjects of multi-billion-dollar civil lawsuits pending in the United States regarding the same misconduct. The banks face billions of dollars of potential liability in those lawsuits. Dimond Kaplan & Rothstein investment fraud lawyers are involved in the lawsuits regarding the rigging of Libor.