Morning Agenda: Deutsche Bank Rebuked
by SYDNEY EMBER Posted 23 Jul 2014
Deutsche Bank’s primary regulator in the United States is said to have found serious problems with the bank’s financial reporting procedures and oversight, Matthew Goldstein writes in DealBook. Jordan Thomas, a lawyer who represents a former Deutsche Bank risk analyst who filed a whistle-blower claim against the bank, said that the regulator, the Federal Reserve Bank of New York, sent a letter in December to officials at the German bank notifying them of the findings of its review. American depositary receipts of Deutsche Bank fell nearly 3 percent in late trading on the New York Stock Exchange. Shares lost about 0.6 percent in early trading in Frankfurt on Wednesday.
Mr. Thomas said he had seen a copy of the letter, and it directed Deutsche to fix problems in its financial reporting procedures ‒ problems the letter said had existed for several years. The letter coincided with a push by United States regulators for banks, especially ones based overseas, to be held to the same capital requirements as American banks. Deutsche Bank, one of Europe’s largest banks, was a forceful opponent of the Fed’s push to force foreign banks to comply with the same capital requirements as domestic banks.
Mr. Thomas said the New York Fed’s findings were consistent with complaints raised by his client, Eric Ben-Artzi, in a whistle-blower action filed with the Securities and Exchange Commission in 2011. Mr. Ben-Artzi, a former quantitative risk analyst, told the agency he had evidence that Deutsche Bank had hidden billions of dollars in losses to avoid a potential bailout during the financial crisis. The complaint by Mr. Ben-Artzi and a similar one raised by another former Deutsche Bank employee, Matthew Simpson, are the focus of an investigation by the S.E.C. that is believed to still be active.
Barclays PLC and Deutsche Bank AG Hit With Yet More Bad News
By Rupert Hargreaves https://uk.finance.yahoo.com/news/barclays-plc-deutsche-bank-ag-103334010.html
It seems as if the whole world is turning against Barclays (LSE: BARC) (NYSE: BCS.US) right now. After coming under attack for misleading investors about its dark pool trading venue, Barclays is now under investigation for helping hedge funds avoid billions in US government taxes.
Complex products Barclays
It was revealed yesterday that Barclays and the bank’s European peer, Deutsche Bank, had been helping hedge funds avoid US taxes. These revelations were made in a report published by the Senate permanent subcommittee, about investigations conducted by the Committee on Homeland Security and Governmental Affairs.
According to the report, the two banks were using a method called “basket options” to hide the trading activities of hedge funds. Simply put, these options allowed hedge funds to hide their trading profits in each banks own accounts. Hedge funds then collected a lump sum payout at the end of the year.
As a result, hedge fund profits collected from these basket options were taxed as long term capital gains, rather than short term trading profits, which are taxed at a higher rate.
Between 1998 and 2013, both Barclays and Deutsche are estimated to have sold 199 of these basket options, encompassing more than $100bn in trades.
Read More: uk.finance.yahoo