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Deutsche Bank Whistleblower Gets $200 Million Bounty for Tip on Libor Misconduct

A whistleblower was awarded a record $200 million for aiding in a probe of Deutsche Bank’s Libor misconduct, people familiar with the matter said

10/22/2021 3:30:00 AM

A whistleblower was awarded a record $200 million for aiding in a probe of Deutsche Bank’s Libor misconduct, people familiar with the matter said

A whistleblower whose information helped U.S. and U.K. regulators investigate manipulation of global interest-rate benchmarks by Deutsche Bank was awarded nearly $200 million for assisting the probe, according to people familiar with the matter.

A whistleblower whose information helped U.S. and U.K. regulators investigate manipulation of global interest-rate benchmarks byAGwas awarded nearly $200 million for assisting the probe, according to people familiar with the matter.The payout is the largest ever by the Commodity Futures Trading Commission, which along with the Justice Department and U.K. Financial Conduct Authority settled enforcement actions against Deutsche Bank in 2015.

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The CFTC’s announcement didn’t name the bank or the case, but the reward is related to the bank’s manipulation of the London interbank offered rate, or Libor, and similar widely used benchmarks, the people said.Newsletter Sign-upOur Morning Risk Report features insights and news on governance, risk and compliance.

PREVIEWSUBSCRIBEThe whistleblower’s application for an award was initially denied by the CFTC, but the U.S. derivatives regulator ultimately decided that the individual’s information was helpful after the whistleblower submitted a request for reconsideration. headtopics.com

“We’re very happy that the CFTC was able to reverse an earlier decision and turn around their thinking,” David Kovel, a managing partner at law firm Kirby McInerney LLP who represents the whistleblower. “It says a lot about the people there that they don’t feel forced to stick with the wrong decision given the amount that’s at stake.”

The Wall Street Journal previously reported that the former executive had provided information that helped CFTC and Justice Department investigations that led to roughly$2.5 billion in settlementswith Deutsche Bank in 2015, including $800 million with the CFTC. They alleged that the bank manipulated Libor, a benchmark interest rate used to set short-term loans for global banks which traders and other bank employees could manipulate because it was based on oral submissions and not on actual transactions.

“The kind of information he provided was of the sort that was very hard to get if you don’t know where to look in a big financial organization,” Mr. Kovel said.Rigging Libor was profitable for banks and other market participants because billions of dollars worth of derivatives known as swaps were priced off movements in the benchmark.

A spokesman for Deutsche Bank declined to comment. Read more: The Wall Street Journal »

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