By Olivia Cuccaro
Beginning in March of 2015, Deutsche Bank has undergone multiple investigations because of their questionable financial statements in regards to offshore accounts. The international bank has been caught transferring $10 billion offshore through the use of a mirror trading scheme. Mirror trading, in itself, is legal and is not uncommon. Brokers who specialize in these binary options are conscious of the risks that are assumed with these trading activities. If a broker were to falsely influence the market to cause another broker to lose in a trade, the act would be seen as illegal, however, the majority of platforms followed are transparent and legal.
Deutsche Bank moved $10 billion dollars to offshore accounts which were originally held in Russia. The issue arose when the financial statements depicting the funds were unclear and avoided certain Russian tax regulations. As a result of the suspicion and a series of legal accusations from the United States, Deutsche Bank is currently being investigated by both U.S. and European agencies. With this investigation ongoing, confidence in Deutsche Bank has diminished which can easily be seen in the drop in stock price, specifically in Frankfurt. The stock is trading at one third of the rate it traditionally sells at, hurting the company in a time when they are looking to increase profitability.
Further questioning comes from the United States Justice Department who is demanding clarification on the anti-money-laundering regulations being upheld at the time of the mirror trading. This regulation assures that Deutsche Bank has been, and is continuing, to fully inform the involved parties in both Russia and London- the two main players in the mirror trading scheme. It has been found that the company faces crucial weaknesses as a result of the constant legal disputes as well as general company practices. After an internal audit was conducted by the Russian Central Bank, it was declared that Deutsche bank was affected by an outside, criminal scheme, leading the company to reduce operations in Russia. Outside regulators, such as those in the United States, are still doubtful as to whether or not the bank intentionally avoided regulation to seek an increase in profit. Deutsche Bank has also recently restructured the company’s regulation to avoid similar situations in the future.
In addition to the mirror trading issues, Deutsche Bank has been charged with a $14 billion fine because of their role in the mortgage backed security market leading up to the 2008 financial crisis. Deutsche Bank was one of the primary foreign originators of American mortgages which crumbled as loan defaults became common in the crisis. Because of the unsuccessful business transactions, the company will pay this large fee to settle outstanding claims.
Deutsche Bank continues to face legal charges in various aspects of their business, both foreign and domestic. It will take strong leadership and company reorganization to change the ongoing status of the bank and to ensure the future success of the business.