New York’s banking regulator has asked Deutsche Bank AG for e-mails, memos, client lists and other details as part of an effort to survey how broadly a set of suspicious trades extended beyond the bank’s Moscow office, according to a person briefed on the matter.
The formal request for information, which was sent last week, the person said, marks a deepening of the New York State Department of Financial Services’ probe into Deutsche Bank’s activities in Russia. The DFS has been looking into whether people at the bank’s Moscow operation conducted trades that would help Russian clients skirt economic sanctions, the person said.
Bloomberg News reported June 5 that DFS was looking at unusual trading activity at the bank’s Russian unit.
The New York regulator asked the bank to provide a complete list of the employees involved in the suspicious trading, as well as the identities of the counterparties involved, and whether those counterparties were subject to U.S. sanctions.
A spokesman for Deutsche Bank in London didn’t immediately return a call seeking comment.
The transactions being examined involve stocks bought by Russian clients in rubles through Deutsche Bank, and simultaneous trades through London in which the bank bought the same securities for similar amounts in U.S. dollars, Bloomberg reported last month.
Deutsche Bank had already launched its own internal investigation into whether the transactions -- so-called mirror trades -- allowed Russian clients to move funds out of the country without properly alerting the authorities, Bloomberg reported.
The DFS also asked for information about whether any of the bank’s other operations, including those in New York, were connected with the trades, the person said. The formal request asks specifically about a December incident in which a person offered a bribe to a Deutsche Bank employee in Moscow in order to get the bank to resume trading with a counterparty that had been banned by the bank, said the person briefed on the matter. The bribery attempt didn’t work, the person said.
As overseer of banks licensed to operate in New York, DFS is one of Deutsche Bank’s American regulators. The DFS probe of mirror trading comes at a time when Deutsche Bank is being investigated for alleged violations of U.S. sanctions laws, as well as manipulation of foreign exchange rates. The bank has already settled an investigation into the manipulation of the London interbank offered rate, or Libor, in which a subsidiary entered a guilty plea.
The regulatory scrutiny and record fines have weighed on the stock, adding to pressure on management to turn around the lender. The bank’s co-chief executives, Anshu Jain and Juergen Fitschen last month announced they would step down. Jain was replaced by John Cryan, who will also take over from Fitschen in May.
The information request, and details about the attempted bribe, were reported earlier by the Financial Times.
sourche: http://www.bloomberg.com/news/articles/2015-07-13/deutsche-bank-inquiry-deepens-as-new-york-seeks-moscow-memos
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