NatWest Markets pleads guilty to wire and securities fraud
The company's general counsel entered the plea Tuesday morning
NatWest Markets PLC pleaded guilty Tuesday to wire and securities fraud, admitting that its traders in London, Singapore and Connecticut engaged in a number of schemes between 2008 and 2018 to manipulate U.S. Treasury markets.
NatWest Markets’s general counsel entered the plea in a hearing held remotely Tuesday morning before a federal judge in Connecticut. Prosecutors said the punishment the bank agreed to included around $35 million in fines and other penalties, a three-year term of probation during which NatWest is required to cooperate with prosecutors and the appointment of a corporate monitor to assess the bank’s compliance practices.
The bank’s parent company, NatWest Group NWG 2.17% PLC, disclosed in September that Justice Department officials told bank officials the alleged manipulative trading, known as spoofing, violated the terms of an earlier settlement the bank had entered in 2017, when it was known as Royal Bank of Scotland.
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Under that deal, a subsidiary then known as RBS Securities Inc. admitted its traders defrauded counterparties when dealing in mortgage securities and other loan-backed investments; in exchange, the Justice Department agreed not to prosecute the bank.
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NatWest told investors in September that it believed the spoofing allegations shouldn’t cause its earlier deal to be voided, but Justice Department officials have said they are applying fresh scrutiny to settlement agreements that allow companies to avoid prosecution but demand a hefty fine and a probationary period of good behavior.
"At the end of the day, we cannot have a system where it appears that entering into one of these agreements is just the cost of doing business," Deputy Attorney General Lisa Monaco said earlier this month at The Wall Street Journal’s CEO Council. "You are going to see, in the days and weeks to come, a desire and a focus on making sure companies are living up to those commitments, and when they don’t, there will be consequences."
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The plea deal comes just over a week after a NatWest subsidiary pleaded guilty in the U.K. and was fined £264.7 million, equivalent to $351.3 million, over failing to act on multiple red flags that a major client was laundering money.
The Justice Department has informed Deutsche Bank AG that the German lender also may have violated an earlier criminal settlement when it failed to tell prosecutors about an internal complaint in its asset-management arm’s sustainable investing business, The Wall Street Journal reported earlier this month.