Deutsche Bank has agreed to a $220 million, 45-state settlement over its role in the manipulation of the benchmark London Interbank Offered Rate, New York Attorney General Eric Schneiderman’s office announced Wednesday.
“We will not tolerate fraudulent, manipulative or collusive conduct that interferes with or undermines confidence in our financial markets. Large financial institutions, like all other market participants, have to abide by the rules,” Schneiderman said in a statement.
Deutsche, along with more than a dozen other banks, helped set the interest rates for trading of the U.S. dollar and other currencies. The interest rate affects trillions of dollars worth of financial instruments.
From 2005 through the global financial crisis, investigators say they found the bank unlawfully defrauded counterparties by failing to disclose it had made false or misleading LIBOR price submissions, had traders who attempted to influence other banks’ traders to benefit Deutsche’s position, and was aware that submissions were being falsified by other banks as well.
According to Schneiderman, the manipulation defrauded government entities and not-for-profits of funds “that otherwise could have been used to benefit New Yorkers.” These entities entered into swaps and other financial contracts with Deutsche not knowing the interest rate on the dollar was being manipulated.
Schneiderman acknowledged that Deutsche Bank cooperated with the investigation.
A spokesman for the bank said in a statement that this resolves the bank’s last U.S. regulatory inquiry related to LIBOR.
New York and California led the investigation, according to Schneiderman’s office. Georgia was one of other 43 states that participated, according to the agreement.
Of the $220 million agreed to by Deutsche, more than $213 million will be made available to entities that had swap and other investments with the bank. The remainder of the settlement balance will cover investigation and other expenses.
The settlement is the second related to state prosecutors’ specifically investigating LIBOR manipulation. Last year, Barclays agreed to a $100 million settlement with Schneiderman and the other 45 states that are part of the investigation working group. A number of other banks are still being investigated, according to the New York AG’s office.
The settlement is also just the latest Deutsche has entered into over LIBOR accusations. In July, it agreed to pay $77 million in an antitrust suit over manipulation allegations related to the Japanese yen interest rate.
A version of this article first appeared in the New York Law Journal, a Daily Report affiliate.