Deutsche Bank to Resolve U.S. Gold Price-Fixing Case

Zacks Equity Research

Legal hassles for major global banks continue unabated. The German lender – Deutsche Bank AG DB – has agreed to settle the private U.S. antitrust litigation by traders and other investors by paying $60 million. The bank was accused of manipulating gold prices.

The settlement was filed in the U.S. District Court in Manhattan and had been awaiting judge's approval. However, Deutsche Bank denied any wrongdoing and Amanda Williams, spokeswoman of the bank, refrained from comments. Further, terms of the settlement were undisclosed.

Notably, the above mentioned case is among the many cases in the Manhattan court, under which banks are alleged for conspiring to rig rates and prices in financial and commodities markets.

In 2014, apart from Deutsche Bank, Barclays PLC BCS, The Bank of Nova Scotia BNS, HSBC Holdings Plc HSBC and Societe Generale Group (SCGLY), were sued by investors for manipulating gold prices from 2004 to 2013. Investors had alleged that these banks colluded to rig prices of gold, gold futures and options and gold derivatives via twice-a-day meetings, to set the London Gold Fixing.

The U.S. District Judge in Manhattan – Valerie Caproni – rejected appeals by The Bank of Nova Scotia, HSBC, Barclays and Societe Generale, in Oct 2016, to dismiss the gold rigging lawsuit.

In Oct 2016, Deutsche Bank also agreed to the settlement of a lawsuit related to silver price manipulation, by paying $38 million.

Deutsche bank has lost nearly 34% on the NYSE year to date, reflecting investors' concern amid a challenging operating environment with low sometimes even negative rate scenario and global economic slowdown. Investors’ worries over the bank’s growth prospects were further aggravated following its recent confirmation of the proposed $14-billion settlement by the U.S. Department of Justice tied with mortgage practices.



Banks’ physical commodity businesses have already been under scrutiny for quite a long time. Several banks have been penalized for manipulating financial benchmarks and the foreign exchange markets.

Further, many banks are moving away from the physical commodity businesses owing to lower profitability and heightened regulatory attention. At present, companies which still conduct physical commodity businesses are required to shift toward automation, in a bid to improve transparency and prevent manipulation.

Deutsche Bank currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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