Deutsche Bank AG announced that it will pay $55 million to settle U.S. Securities and Exchange Commission claims that it faked the value of derivatives during the financial crisis.
If this sounds familiar its because you've heard it before. Here and Here to be precise.The firm was also fined $2.5 billion for manipulating interest-rate benchmarks by four regulators in the U.S. and the U.K just last month.
“Deutsche Bank’s financial statements did not reflect the significant risk in these large, complex illiquid positions,” Andrew Ceresney, director of the SEC’s Division of Enforcement said. “Deutsche Bank failed to make reasonable judgments when valuing its positions and lacked robust internal controls over financial reporting.”
The investigation began in 2012 after a former employee alleged Deutsche Bank had misrepresented the value of derivatives on a $130 billion portfolio to mask losses during the financial crisis.
By not reporting the paper losses, the bank was able to appear solvent and avoid government seizure. The company, a notorious liar, previously denied the allegations.
Predictably in this case, unlike everyday Americans, Deutsche Bank didn't have to admit or deny any wrongdoing in the settlement announced Tuesday.
The bank claims to have bolstered its internal controls over how it values illiquid assets, the company said in a statement, yet its controls seem as weak as ever judging by the record level of criminal activity that has been identified by prosecutors.
Such activity is likely just the tip of the iceberg, though the full extent of the firm's criminal deeds will likely go unknown due to a cozy relationship with regulators and politicians.
The bank is financially one of the weakest in the country, as it failed U.S. stress tests this year and its capital plan for the U.S. unit was rejected over deficiencies across risk-identification and measurement, the two exact areas the criminal firm claims to have strengthened in today's press release.
Deutsche Bank isn't even done with all its prosecutions, as it still faces potential fines related to foreign exchange, mortgage- and asset-backed securities and precious metals dealings, and is also under investigation for alleged U.S. sanctions violations, according to the company’s 2014 annual report.
The long list of criminal violations continues to raise the question: At what point are big Wall Street firms just criminal racketeering outfits?