Deutsche Bank Fires 3 NY-Based Traders Amid Global Forex Probe of Rate Manipulation

The FX dealer has reportedly fired three New York-Based traders including Diego Moraiz, Robert Wallden and Christopher Fahy, reported Reuters

dblogoThe banking conglomerate with significant market share of Foreign Exchange volumes through its Institutional FX dealing business lines, Deutsche Bank AG, has reportedly fired three FX traders in New York amid ongoing Forex investigations by global regulators that has drawn some of the largest dealers into the massive probe of alleged rate manipulation, according to news broken by Reuters, citing sources familiar with the firings.

The New York FX Traders include Diego Moraiz, Robert Wallden and Christopher Fahy who were said to be terminated by the bank yesterday, according to sources familiar with the development.

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The bank has been cited as previously putting one of the traders on suspension. Forex Magnates was unable to confirm with a company spokesperson as such matters are neither confirmed nor denied with regards to staff employment status.

However, the bank said it was cooperating with regulators in response to any requested information, as previously noted, a company spokesperson told Forex Magnates today, “Deutsche Bank has received requests for information from regulatory authorities that are investigating trading in the foreign exchange market. The Bank is cooperating with those investigations, and will take disciplinary action with regards to individuals if merited.”

Deutsche Bank’s Chairman, Paul Achleitner, recently called for major changes in the way FX rates are fixed surrounding the current 4pm daily fixing process, “The way daily currency benchmarks are set in the $5-trillion-a-day market needs to be looked at but limiting trade at daily fixings is not the answer,” as reported by Forex Magnates just last week.

Electronic Chatting Under Scrutiny

Moraiz was said to have been with the bank for nearly ten years, and about 50 years old, and ran the bank’s emerging markets foreign exchange trading desk, specializing in trading the Mexican peso, also noted by Reuters, and having held the role of Managing Director — he was the most senior of the three traders let go on Tuesday

The U.S. Federal Bureau of Investigation (FBI) was said to have confronted Wallden, age 29, a director in the Forex trading unit at DB, at his residence with copies of an online chat transcript where it seemed he had boasted about trying to manipulate FX rates, according to reports from The Wall Street Journal in November. Fahy, in his 30’s was also said to be a director of the FX trading unit.

Nearly 20 traders have been suspended and/or let go since last November, across a number of larger FX dealers linked to the investigation. The UK’s Financial Conduct Authority, just yesterday, said some ten banks had handed over data in relation to the regulator’s investigation of alleged FX market manipulation.

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EU Voted on  Harsher Consequences for Financial Market Manipulation

Banks appear to have been distancing themselves to any staff that may have been involved in alleged wrongdoing, with a vote from the EU parliament yesterday aimed to upgrade the harshness of reprimand against market manipulation and insider trading violations, by instituting a minimum 4-year prison sentence under criminal charges.

This would change the current structure where such violations are considered a civil matter, punishable by monetary penalties and restitution (with regards to the European Union), and still requires approval by the council of ministers before a 24-month period for the changes to be implemented on the state member level. In the US, the CFTC pursues both criminal and civil cases brought to federal district courts, carrying either such consequences for certain statutory violations, similarly.

Numerous other regulators are involved, with multilateral reach under an IOSCO memorandum that allows cross-border regulatory cooperation to aid in the international scope of the Forex probe underway. The FCA noted that it was unlikely to conclude the complex investigation anytime during 2014, and how it was still too early to bring any cases.

Deutsche Bank Overcoming Challenging Q4

The news follows after the bank had banned certain online chat communications, after the attention of the FX investigations focused on nefarious online chat cartels that allegedly colluded on FX market manipulation. The bank’s management said the firm was poised to overcome current challenges by around 2015, and on track with its long-term targets but how 2014 could still be bumpy.

Deutsche Bank has reported challenging conditions for its Q4 after it released preliminary figures in January, as covered by Forex Magnates, and is expected to report full year audited results for 2013 in its annual report on March 20th, 2014.

Shares of DB listed on the NYSE were up nearly 1% in the pre-market session, and reflected the roughly 1% rise today where the firm is dually listed on XETRA under the symbol DBKGn.DE.


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