Deutsche Bank Ordered to Pay Fired Rate Traders $500,000
Four Deutsche Bank AG (DBK) traders who won reinstatement of their jobs after they were dismissed following an internal probe into rate-rigging were awarded almost $370,000 ($500,000) in back pay.
The total monthly pay of the four men, who were fired in February, ranged from 10,833 euros to 22,083 euros on average, according to the written version of the judgment made Sept. 11 and released by the Frankfurt Labor Court yesterday. The men, whose names weren’t disclosed, returned to work on Nov. 4, according to the bank.
The traders included two managing directors, a vice president and a director, according to the ruling. The managing directors were awarded bonuses of 2.7 million euros and 780,000 euros for 2011, while the two more junior bankers were awarded 200,000 euros and 180,000 euros, according to the judgment. Investment bank bonuses are typically paid over several years.
Regulators around the world are investigating whether more than a dozen firms, including Deutsche Bank, colluded to rig benchmark interest rates. Barclays Plc, UBS AG (UBSN) and Royal Bank of Scotland Group Plc are among companies that have been fined about $3.7 billion for rigging the London interbank offered rate, or Libor, the benchmark for more than $300 trillion of securities worldwide.
The traders said that before they were dismissed, their bonuses for 2011 were reduced as a sanction for their allegedly inappropriate behavior and that an unidentified Deutsche Bank official said they would be compensated once “the situation had calmed down,” according to the ruling.
Deutsche Bank disputes that account, the document shows. Deutsche Bank is reviewing whether to appeal the rulings, Ronald Weichert, a spokesman for the lender, said.
The court found “indications” that the fired staff wrongfully took derivatives trading positions of colleagues into account when deciding which rates to submit, the judges wrote.
Chat transcripts showed that one of the men in July 2007 told a derivatives trader he would try to “keep the 1M fixing low,” asking him whether that was ok and whether he had “any interest” in two other rates to be submitted. The derivatives trader replied by saying he wished them to be high, “if that was also okay,” according to the court documents.
Though it’s against the bank’s rules to fix rates, the lender couldn’t use it as a reason to fire the traders in the case because it didn’t have sufficient guidelines on rate submissions, didn’t control the process, and had systems in place that fostered the behavior, the court ruled.
Having submitters who were also derivatives traders caused a “permanent conflict of interest, the judges said. Deutsche Bank ‘‘is complaining about a behavior the bank itself only made possible.’’
The court said the total value of the wrongful dismissal claims is 1.9 million euros. That figure reflects the pay owed to the plaintiffs, including any potential future earnings under their employment contract.