Attorney General Eric T. Schneiderman has announced a $220 million, 45-state settlement with Deutsche Bank for fraudulent conduct involving the manipulation of U.S. Dollar (USD) LIBOR (the London Interbank Offered Rate) and other benchmark interest rates.
"We will not tolerate fraudulent, manipulative or collusive conduct that interferes with or undermines confidence in our financial markets. Large financial institutions, like all other market participants, have to abide by the rules," said Attorney General Schneiderman. "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."
The investigation found that from as early as 2005 and continuing through the financial crisis, Deutsche Bank acted unlawfully. Specifically, the investigation found that Deutsche Bank defrauded counterparties by failing to disclose that: (a) Deutsche Bank made false or misleading LIBOR submissions; (b) Deutsche Bank's traders attempted to influence other banks' LIBOR submissions to benefit Deutsche Bank's trading positions; and (c) Deutsche Bank was aware that other banks were manipulating their LIBOR submissions and that LIBOR was a false rate.
As a result of this misconduct, Deutsche Bank employees and management knew or had strong reason to believe that Deutsche Bank's and other panel banks' LIBOR submissions did not reflect their true borrowing rates and that published LIBOR rates did not reflect the actual borrowing costs of Deutsche Bank and other panel banks.
According to the terms of the settlement, those entities with LIBOR-linked swaps and other investment contracts with Deutsche Bank will be notified if they are eligible to receive a distribution from a settlement fund of $213,350,000. The balance of the settlement payment will be used for the expenses of the investigation and for other uses consistent with state laws.