HomeDeutsche Bank whistleblower gets $200 million in tip for Libor misconduct

Deutsche Bank whistleblower gets $200 million in tip for Libor misconduct

A whistleblower whose information helped regulators in the US and UK investigate manipulation of global interest rate benchmarks German Bank AG received nearly $200 million to help him with the investigation, according to people familiar with the matter.

The return is the largest ever by the CFTC, which together with the UK’s Department of Justice and the UK’s Financial Conduct Authority settled enforcement action against Deutsche Bank in 2015.

The CFTC announcement did not name the bank or issue, but the reward is about the bank’s manipulation of the London Interbank Offered Rate and similar widely used criteria, the people said.

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A picture of a logo on the Deutsche Bank building in Geneva, Switzerland, October 11, 2016. REUTERS/Denis Balibouse/File Photo

The whistleblower’s request for an award was initially denied by the CFTC, but the US Derivatives Regulatory Authority eventually decided that the individual’s information was useful after the whistleblower submitted a request for reconsideration.

“We are very pleased that the CFTC was able to reverse an earlier decision and shift their thinking,” said David Covel, managing partner at law firm Kirby McInerney LLP who is representing the whistleblower. “A lot of people out there say they don’t feel compelled to make the wrong decision given how much is at stake.”

The Wall Street Journal previously reported that the former CEO provided information that helped the CFTC and the Department of Justice in investigations that nearly led to this. $2.5 billion in settlements With Deutsche Bank in 2015, including $800 million with the CFTC. They alleged that the bank had manipulated Libor, a benchmark interest rate used to set short-term loans to global banks that could be manipulated by merchants and other bank employees because it was based on oral reports rather than actual transactions.

“The kind of information he gave was the kind that was very hard to get if you didn’t know where to look at a big financial institution,” Covell said.

Rigging Libor has been profitable for banks and other market participants because billions of dollars in derivatives known as swaps have been priced from moves in the index.

A Deutsche Bank spokesman declined to comment.

The prospect of such a significant payment pushed the CFTC Whistleblower Program In turmoil this yearAgency leaders emphasized that there was no mechanism in place to pay the former CEO of the bank and other applicants and continue funding the program. The agency avoided a crisis after President Biden signed into law a bill in July to fund the program.

The CFTC’s investigation was already underway by the time the whistleblower approached a separate agency, the officials wrote in an award order. But the information proved valuable in interviews with authorities as they expanded their investigation, according to the order.

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Dawn Stamp, the Republican commissioner of the Commodity Futures Trading Commission, said in a statement that she did not agree to attributing the award in part to a fine imposed by a foreign regulator. Like the CFTC’s announcement, Ms Stump did not name the bank or the underlying case in her statement.

Ms Stump writes that the CFTC has not previously awarded any mentor award based on an enforcement action from a third-party regulator.

“I think we need to take a particularly close look at instances where whistleblowers are requesting the Commission to utilize its limited client protection fund to obtain an award relating to action by a foreign prospective authority to address harm outside the United States,” Ms. Stump wrote.

Thursday’s prize is the largest ever issued to a single person since the Dodd-Frank Financial Reform Act of 2010 created the programs to help avoid other massive scams such as Bernie Madoff’s Ponzi scheme.

Last year, the Securities and Exchange Commission issued the largest batch of whistleblowers ever About $114 million for Polyster.

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“It shows that the CFTC program, like the SEC program, over the past 10 years, has already reached maturity,” said Marie Inman, an attorney representing the whistleblower at law firm Konstantin Cannon LLP.