Deutsche Bank AG will pay $220 million to settle claims brought by 45 U.S. states in connection with the German bank's artificial manipulation of benchmark interest rates, New York Attorney General Eric Schneiderman said Wednesday.
The settlement agreement follows an investigation, led by the attorneys general in New York and California, into alleged fraud in how 16 banks, including Deutsche Bank, set the London interbank offered rate between 2005 and 2010. Libor and other benchmark interest rates are used to set the price on trillions of dollars in loans and derivatives world-wide.
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According to the settlement agreement, Deutsche Bank failed to disclose its false or misleading Libor submissions, attempted to influence other banks' Libor submissions to benefit Deutsche Bank's trading positions, and knew other banks were manipulating their Libor submissions but failed to disclose it.
The settlement announced Wednesday brings Deutsche Bank's tally of regulatory payouts for alleged Libor-related misdeeds to around $3.7 billion. That tally comes to just over $4 billion when civil settlements are included.
"This settlement resolves the bank's final pending U.S. regulatory inquiry related to Libor," a spokeswoman for Deutsche Bank said in a statement.
Under the settlement's terms, entities with Libor-linked swaps or investment contracts with Deutsche Bank will be notified if they can receive distribution from a $213 million escrow fund.
"We will not tolerate fraudulent, manipulative or collusive conduct that interferes with or undermines confidence in our financial markets," Mr. Schneiderman said. "As a result of Deutsche Bank's misconduct, government entities and not-for-profits were defrauded of funds that otherwise could have been used to benefit New Yorkers."
Deutsche Bank is the second bank to reach a settlement in the states' investigation; Barclays Bank PLC and Barclays Capital Inc. agreed to a $100 million settlement in August 2016.
Deutsche Bank is one of a raft of global investment banks that collectively paid billions in fines in connection with Libor-rigging allegations. In April 2015, the German lender paid $2.5 billion to settle U.S. and British Libor-rigging allegations and admitted wrongdoing. Two years earlier, the bank paid nearly $1 billion to resolve a European antitrust investigation into Libor.
Regulators found Deutsche Bank put profits over compliance, failing to police employees who were involved in setting widely used interest-rate benchmarks. The bank suffered additional penalties in part because, according to regulators, the bank failed to cooperate adequately in yearslong investigations.
Deutsche Bank cooperated with the states' investigation, according to the settlement agreement.
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(END) Dow Jones Newswires
October 25, 2017 15:00 ET (19:00 GMT)