Deutsche Bank AG (DBK) faces a hearing in a lawsuit by four traders fired over the lender’s role in the alleged rigging of interest benchmarks after mandated mediation failed to produce a settlement.
The Frankfurt labor court will hear arguments tomorrow over whether the four men were wrongfully dismissed by the bank in February. Another banker, who was the most junior of the group, reached a settlement with the bank, two people familiar with the matter said in July.
“Why the bank fired them and other details of the case will be discussed at the hearing,” said Gesine Brackert, a spokeswoman for the labor court.
Regulators from Canada to Switzerland are investigating whether more than a dozen lenders, including Deutsche Bank, colluded to rig benchmark interest rates including the London and Euro-area interbank offered rates for profit or to mask their true cost of borrowing. Barclays Plc (BARC), UBS AG and Royal Bank of Scotland Group Plc have paid a total of about $2.5 billion in fines after admitting wrongdoing.
Deutsche Bank has fired at least seven employees over suspected misconduct in connection with rates. The bank, continental Europe’s largest by assets, said in February that while it would fire or suspend workers that acted inappropriately, it wouldn’t identify individuals.
Deutsche Bank justified the dismissal of the employees by saying they had inappropriate communication with a trader the bank fired at the end of 2011 for trying to rig rates, one of the people familiar with the matter said in July.
“We found that certain employees, acting on their own initiative, had engaged in conduct that fell short of the Bank’s standards,” Christian Streckert, a spokesman for Frankfurt-based Deutsche Bank, said yesterday. “Action was taken accordingly, including suspension or dismissal of employees and clawing back of unvested compensation.”
Peter Roelz, a lawyer for the four traders, declined to comment on the trial.
The traders fired in February were based in Frankfurt and included two managing directors, two directors and a vice president, two people with knowledge of the matter said at the time. Submitting euro interbank offered rates was part of their responsibilities, the people said.
A mediation hearing in April didn’t yield any results.
Deutsche Bank isn’t the only lender to terminate traders over the rates probes. RBS has fired seven people for Libor-related misconduct, including two managers, a person familiar with the matter said in April. More than 25 people have left UBS after an internal review of interest-rate manipulation, a person familiar with the matter said in November.
Barclays has disciplined 13 employees and dismissed five, Rich Ricci, the bank’s former head of corporate and investment banking, told British lawmakers in November.
Deutsche Bank said a year ago that its internal rates probe found misconduct by individual employees though no wrongdoing by current or former board members.
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