Monte Paschi Fraud Case Sees Deutsche Bank Woes Deepening

Accusations that it was running an international criminal organization at the time must be faced by Deutsche Bank AG, on trial in Milan for allegedly helping Banaca Monte dei Siena SpA conceal losses.

The circumstances were aggravated to the charges the German lender already faces related to derivatives transactions as in order to persuade a three-judge panel to consider whether there were additional, prosecutors used internal Deutsche Bank documents and emails. The material included a London trader’s “well done!” message to a banker who is now on trial, claims news outlet Bloomberg.

if they win a conviction, there can be a higher penalty if prosecutors are allowed to argue that the alleged market manipulation crimes were committed by an organization operating in several countries. But by saying that there wasn’t a clear connection between the original charge of market manipulation and the alleged aggravating circumstances, Giuseppe Iannaccone, a lawyer for Deutsche Bank and some of the defendants, sought to block the move at Tuesday’s hearing.

“The trial for Deutsche Bank managers becomes more problematic after the judge’s decision,” said Giampiero Biancolella, an attorney specializing in financial crime who isn’t involved in the case. “If proven, the aggravating circumstance may increase the eventual jail sentence for the market manipulation to a maximum of nine years.”

Accused of colluding with Monte Paschi to cover up losses that almost toppled the Italian lender before its current battle for survival, the German bank and Nomura Holding Inc. went on trial in Milan in December. Charged for alleged false accounting and market manipulation were thirteen former managers of Deutsche Bank, Nomura and Monte Paschi.

To hide losses at the Italian lender, leading to a misrepresentation of its finances between 2008 and 2012, Deutsche Bank and Nomura are accused of using complex derivative trades. Monte Paschi restated its accounts and tapped shareholders twice to replenish capital after the deals came to light in a 2013 Bloomberg News report.

For or allegedly helping falsify the Siena-based lender’s accounts through a deal known as Santorini, Deutsche Bank and six current and former managers were indicted in Milan Oct. 1.

Events that occurred in other parts of the globe, including the possible manipulation of an index, which isn’t the subject of charges in the Milan case, is the deciding factor for the prosecution’s request to label Deutsche Bank an international criminal association.

Deutsche Bank employees may have manipulated internal indexes to help ensure the success of the deal, said a Bottom of Form

2014 confidential audit commissioned by German regulator Bafin.

An internal Deutsche Bank review described “abnormalities” in the values of proprietary indexes used to set the price for the Monte Paschi deal in December 2008, the study, requested by Bafin, said.

The Italian court documents cite the internal Deutsche Bank report, which has never been made public. “DB’s own trading activities were a significant factor in the observed ‘spike’ in prices and volumes,” a portion of the bank’s document says, reported Bloomberg.

(Adapted form Bloomberg)


Categories: Regulations & Legal, Strategy, Uncategorized

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