Fines & Penalties Monitor: June 2017

The month of June saw a steep decline in the amount of fines, penalties and settlements paid out by the 18 largest institutions headquartered in the U.S. and Europe. Deutsche Bank was the only institution to incur a monetary penalty this month, settling for $170 million and increasing our total to $3.5 billion.

Deutsche Bank paid $170.0MM to settle a lawsuit involving the alleged rigging of the European Interbank Offered Rate (EURIBOR) and related derivatives. Investors accused the bank of rigging the EURIBOR and fixing prices of EURIBOR-based derivatives from June 2005 to March 2011, which is in violation of U.S. antitrust law. Plaintiffs include the California State Teachers’ Retirement System and FrontPoint Australian Opportunities Trust. HSBC Holdings and Citigroup also reach separate settlements last year for similar wrongdoings. The settlement is subject to approval by the U.S. District Court in New York. Deutsche Bank did not admit wrongdoing and agreed to settle to avoid further legal costs.

Over the past six months alone, Deutsche Bank has paid out $1.5 billion (plus an undisclosed portion of a multi-bank settlement for $165 million) over five lawsuits, making it the bank in the group that CPG tracks with the highest number of fines incurred, as well as highest dollar payout, in the first half of 2017. In fact, since the middle of 2015, Deutsche Bank has paid out a total of $9.2 billion in fines, penalties and settlements (with the majority of that amount attributed to the $7.2 billion paid to the Department of Justice in December 2016). Interestingly, Deutsche Bank’s troubles stem from a variety of causes, from mortgage-backed securities to money laundering to Volker Rule compliance failure.

Over the next few weeks, CPG is putting together a snapshot of the fines, penalties and settlements paid out since 2015. Keep an eye out for our upcoming analysis, as well as next month’s blog post, to stay up to date on industry risk!

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