Story by The Sydney Morning Herald
A Deutsche Bank forex trader has been sacked and is under investigation by Australian regulators for inflating trades and costing the investment bank up to $5 million in losses, Fairfax Media can reveal.
Deutsche Bank confirmed that former currency trader Andy Donaldson was first suspended and then fired in June of this year after the bank uncovered irregularities in the way he was valuing his currency trades.
Deutsche Bank’s local chief executive James McMurdo declined to comment on the matter.
But a spokesperson for Deutsche Bank confirmed that “the bank recently dismissed a trader after checks uncovered irregularities in how he recorded his trading activities.
“The issue is internal only and did not have an external impact. The sum involved was not material to the bank.
“We have notified and are working with the relevant authorities and taking steps to ensure that this unacceptable behaviour will not be repeated,” the spokesperson said.
The Australian Securities and Investment Commission and the Australian Prudential Regulation Authorities are working with Deutsche Bank to investigate the matter.
Sources said that Mr Donaldson, who had been stripped of his Bloomberg trading account and could not be contacted, had previously been a highly regarded trader and had worked at the bank’s Sydney office for two years.
It is understood that prior to the discovery he had been overstating trades involving a number of global currencies.
Deutsche Bank had earmarked Mr Donaldson to be transferred to work in the company’s New York office.
The same source speculated that Mr Donaldson’s misconduct had been driven by the desire to boost the bank’s profits and achieve bigger bonuses, which can be worth roughly 5 to 10 per cent of the actual size of the currency trade.
It is the latest scandal to hit the global investment bank which has been named in continuing investigations offshore by international regulators over the manipulation of global benchmark interest rates and the fixing of trades in currency markets.
Deutsche Bank has already fired numerous employees outside of Australia in relation to rogue currency activities as a result of the bank’s own internal investigations.
A spokesperson for ASIC said the market regulator would neither confirm or deny that an investigation is under way. It declined to say whether Deutsche Bank could be fined over the matter.
It is not known whether global regulators are also investigating the case. Deutsche Bank and other major investment banks are under pressure by international regulators to reduce their involvement in riskier business activities and to have more capital to deal with potential scandals.
Deutsche Bank, Barclays, Goldman Sachs, Royal Bank of Scotland Group and UBS, which together account for 43 per cent of foreign-exchange trading by banks, are introducing measures to make it harder for dealers to profit from trading in the currency market.
The investigation involving Mr Donaldson is said not to be linked to any offshore trading scandals which have been previously reported in the press.
It is also understood that no clients or counterparties were affected by the incident.