Deutsche Bank pays $ 12million to Spanish wine company for improper sale of forex derivatives

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Deutsche Bank compensated Spanish wine company J Garcia Carrion to the tune of 10 million euros ($ 12 million) for alleged losses it allegedly suffered while purchasing foreign exchange derivatives from the bank.

Deutsche Bank sent a delegation to Madrid last year to negotiate a settlement for the cumulative losses suffered by Europe’s largest wine exporter over a six-year period. In addition to compensation, the bank has apologized for the behavior of its traders and sellers.

An internal investigation called Project Teal has been launched to probe the abusive sale of these derivatives as viable alternatives by the bank’s executives to its customers.

Customers complained that the instruments were presented as sophisticated and lucrative transactions that were very complex to understand. In addition, they violated EU rules designed to protect businesses against risky loans.

Two senior executives, senior executives Louise Kitchen, head of Deutsche’s asset liquidation unit, and Jonathan Tinker, co-head of global foreign exchange operations, who were in charge of foreign exchange activities, have already been laid off by the Bank.

Deutsche Bank reached several other out-of-court settlements with other customers who were victims of these overpriced transactions.

The banks had previously dismissed concerns about misconduct in transactions as minimal transgression and affecting “a limited number of customers.”

Currency swaps were sold as a less expensive way to hedge currency exposure compared to the traditional foreign exchange channel, resulting in heavy losses for a number of clients, pushing them into trouble. financial.

The settlement is expected to affect Goldman Sachs and BNP Paribas, which face similar charges from JGC.

JGC previously filed a complaint against Goldman Sachs with the UK’s Financial Conduct Authority in May. The complaint alleges that the US bank “instigated the sale of unauthorized speculative derivatives unrelated to Garcia Carrion’s business, with obscure implicit charges, and without regard to relevant risk communication and risk communication regulations. customer activity volume, ”according to a company statement.

Goldman Sachs is fighting allegations denying any wrongdoing and filed a lawsuit in September claiming $ 6.2 million from JGC it is owed.

JGC filed yet another lawsuit against French BNP for facilitating billions of euros in foreign exchange transactions that resulted in tens of millions of losses. An internal investigation by JGC revealed that BNP had carried out more than 8,400 foreign exchange transactions with the company over a period of five years, causing 75 million euros in cash losses. The French bank refused any compensation to JGC. BNP said in a statement that it had complied with all the rules.

Goldman Sachs further says the risks have been made clear to the company and that a multinational company with hedging needs is unlikely to have found derivative transactions too complex to understand. JGC holds a former senior official responsible for these secret transactions and for covering up the wrongdoing by forging documents.

The 130-year-old Jumilla-based wine producer is known for his boxed wine and juice brand, Don Simón.


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