Banking and Finance Law Daily Wrap Up, ENFORCEMENT ACTIONS—Deutsche Bank acknowledges ‘untimely reporting’ violated deferred prosecution agreement with DOJ, (Mar 14, 2022)

By Thomas G. Wolfe, J.D.

In an SEC filing, the bank has disclosed a recent agreement with the DOJ to “extend an existing monitorship” and to “abide by the terms” of the January 2021 deferred prosecution agreement regarding the bank’s internal controls.

In its annual Form 20-F filed with the Securities and Exchange Commission on March 11, 2022 (for the fiscal year ended Dec. 31, 2021), Deutsche Bank Aktiengesellschaft (Deutsche Bank) has disclosed that the U.S. Department of Justice found that the bank violated a January 2021 deferred prosecution agreement with the DOJ “based on untimely reporting” by Deutsche Bank “of certain allegations relating to ESG-related information at the Bank’s subsidiary DWS.” As a result, Deutsche Bank has agreed with the DOJ to “extend an existing monitorship and abide by the terms of [the] prior deferred prosecution agreement until February 2023 to allow the monitor to certify to the Bank’s implementation of the related internal controls.” Further, the DOJ has “reserved all rights to take further action” against the bank in connection with the deferred prosecution agreement “if it deems necessary.”

Under the January 2021 deferred prosecution agreement with the DOJ, Deutsche Bank agreed to pay more than $130 million in criminal penalties, victim compensation, and monies to the Securities and Exchange Commission to resolve the U.S. government’s investigation into the bank’s alleged violations of the Foreign Corrupt Practices Act and commodities fraud.

According to the U.S. Attorney’s Office for the Eastern District of New York, the charges against Deutsche Bank arose from a scheme to conceal corrupt payments and bribes made to third-party intermediaries by falsely recording them on Deutsche Bank’s books and records, as well as related internal accounting control violations, and a separate scheme to engage in fraudulent and manipulative commodities trading practices involving publicly traded precious metals futures contracts. The deferred prosecution agreement calls for over $85 million in criminal penalties, over $1.2 million in victim compensation payments, $681,480 as criminal disgorgement, and approximately $43.3 million to be paid to the SEC for the separate commodities fraud investigation (see Banking and Finance Law Daily, Jan. 11, 2021).

Bank’s SEC filing—additional highlights. Deutsche Bank’s March 2022 filing of Form 20-F with the SEC notes that the bank entered into the deferred prosecution agreement (DPA) with the DOJ, outlines the general terms of the DPA, and references the nature and scope of the two-pronged settlement with the DOJ—namely: (1) the “settlement with the SEC to resolve its investigation into conduct regarding our compliance with the U.S. Foreign Corrupt Practices Act with respect to our engagement of finders and consultants;” and (2) the settlement pertaining to “our historical engagements of finders and consultants” that resolves the “precious metals spoofing.”

Further, Deutsche Bank recognizes certain financial and reputational risks in the SEC filing. For instance, under the DPA settlement, “[i]f we violate the DPA, its term could be extended, or we could be subject to criminal prosecution or other actions, any of which could result in additional fines, penalties, settlements, payments or other materially adverse impacts to us.”

Companies: Deutsche Bank Aktiengesellschaft

LitigationEnforcement: BankingOperations BankSecrecyAct CrimesOffenses EnforcementActions FinancialIntermediaries SecuritiesDerivatives