The U.S. Federal Reserve on Thursday fined Deutsche Bank AG $156.6 million for violating foreign exchange rules and running afoul of the Volcker Rule.The German bank failed to detect and halt its traders from using chat rooms to communicate with competitors, the Fed said in a statement.Central bank officials are “requiring the firm to cooperate in any investigation of the individuals involved in the conduct underlying the FX enforcement,” according to the statement.
In a statement, the bank said, “we are pleased to resolve these civil enforcement matters with the Federal Reserve.”The Fed also said it found gaps in Deutsche Bank compliance with the Volcker Rule, which prohibits government-protected banks from engaging in proprietary trading.The foreign exchange violations were discovered during a four-year-old review of dealings at the bank, the Fed said in a consent order reached with Deutsche Bank.
The bank agreed to improve its oversight of foreign exchange trades as part of the agreement with the Fed.Deutsche still faces a probe by New York’s Department of Financial Services into whether its automated trading platform was programmed to manipulate foreign exchange rates, a person familiar with the matter said on Thursday.The New York regulator has been investigating whether the bank used algorithms on trading platforms to front-run or otherwise take advantage of clients.
Renee Calabro, a spokeswoman for Deutsche, declined to comment on the status of the New York probe.Deutsche was not sanctioned in earlier global probes of foreign exchange manipulation. It was among a handful of banks that settled with Brazil’s antitrust watchdog Cade in December.But the U.S. Department of Justice, UK’s Financial Conduct Authority and the Commodity Futures Trading Commission all declined to bring actions against Deutsche, while other banks were hammered for failing to stop traders on the spot market from trying to rig foreign exchange rates.
Seven banks have paid authorities in the United States and Europe a total of more than $10 billion, and some pleaded guilty to criminal charges.Transcripts of traders communicating in online chat rooms that led to earlier settlements show them working together to move rates, which are used daily by everyone from investment houses to tourists buying foreign currencies on vacation.