Daily Archives: April 25, 2015

Let’s Take Them On!”: Libor E-mails Of Former Prop Trader at Deutsche Bank Christian Bittar Revealed

Back in 2012 we introduced readers to Christian Bittar, a former prop trader at Deutsche Bank who profited handsomely by betting on the direction of rates he conspired with others to manipulate (recall that when it comes to betting on the direction of rates, it’s much easier to make winning trades when you collude with colleagues to fix the benchmark). Readers may also recall that via a bit of digging which began with the LinkedIn profile of someone else named Christian Bittar, we were soon tossed down the Lieborgate rabbit hole only to find that on the other end was the secretive world of Swiss hedge funds and private banks.

We later detailed how Deutsche Bank went about ridding itself of Bittar who was once one of the firm’s most well-paid traders and concluded with the following six point assessment:

  1. Deutsche tells an internal prop trader to invest billions in the Libor market,but tells him: “do everything legally and by the book or else.”
  2. Bittar colludes with virtually everyone else under the sun to generate billions in profits;
  3. Bittar makes tens if not hundreds of millions of bonuses for himself;
  4. Finally, DB no longer can hide the deception and claws back a portion of Bittar’s bonuses, while washing its hands of the full affair;
  5. Scapegoat punished, life goes on.
  6. He went to work for Bluecrest Capital Management LLP, Europe’s third- biggest hedge fund with $30 billion under management.

Fast forward a few years and Deutsche Bank has just been saddled with a $2.5 billion fine for its contribution to the worldwide manipulation of benchmark rates and thanks to the now-public e-mails used by the Justice Department to make its case, we know exactly what Christian said on the way to influencing the fixings. Here’s Bloomberg:

Identified only as Trader Three by the U.S. Department of Justice, he was Deutsche Bank’s most profitable derivatives trader, earning a bonus of almost 90 million pounds ($136 million) in 2008 alone. He was responsible for the majority of the requests for skewed Euribor submissions, the U.S. Commodity Futures Trading Commission said Thursday.

That trader is Christian Bittar, according to two people with knowledge of the situation, who asked not to be identified because they weren’t authorized to speak publicly…

Trader Three worked in concert with colleagues in Frankfurt and as many as six counterparts at other firms, seeking to manipulate the rate to boost the profitability of his positions, according to the Justice Department. Sometimes he allegedly worked against the interests of others at his own firm if it benefited his trading book.

“My cash desk will be against us so we’ll have to do some lobbying,” he told a derivatives dealer at a rival bank in a Sept. 7, 2006, message released by the Justice Department. He noted Royal Bank of Scotland Group Plc and UBS Group AG also were likely to be “against” and promised to contact a trader at an additional firm.

“ok we have to fight hard,” the rival bank dealer replied.

Trader Three’s relationship with his counterpart at that bank didn’t stop him from on occasion submitting rates that would hurt it.

“LETS TAKE THEM ON !!” he said in a Sept. 21, 2005, message to an rate-submitter at Deutsche Bank, according to the bank’s settlement with the New York Department of Financial Services, which described Bittar by his title. The rival bank “IS DOIN IT ON PURPOSE BECAUSE THEY HAVE THE EXACT OPPOSITE POSITION.”

Read on.

U.S. Bank Settles Kickback Allegations

A federal judge Thursday preliminarily approved a $500,000 settlement for a class of homeowners who challenged U.S. Bank’s practice of force-placing insurance through American Security Insurance.
Read on.

JP Morgan Chase Bank for allegedly not meeting terms of agreement to release insurance claim funds to homeowners

GRETNA – JP Morgan Chase Bank is being sued by a pair of homeowners who claim the bank has failed to return funds owed to them for an insurance claim, despite already having made a settlement with the bank regarding payment of the funds.

Peter Yaukey and Laurie Yaukey filed the suit in the 24th Judicial District Court on March 6.

The Yaukeys assert they were provided an insurance claim check worth $69,613.33 from their property insurer for a property they own located at 330 Jefferson Heights in New Orleans. The plaintiffs claim the property was purchased through a mortgage provided by JP Morgan Chase Bank and as such JP Morgan Chase Bank was required to co-sign the check from their property insurer before the funds could be released.

Read on.

Barclays must face U.S. fraud lawsuit tied to ‘dark pool’ probe

Barclays Plc failed to persuade a U.S. judge to dismiss a lawsuit accusing the British bank of defrauding shareholders about a private “dark pool” trading platform even as it was publicly pledging to clean up its corporate culture.

U.S. District Judge Shira Scheindlin in Manhattan on Friday allowed most of the lawsuit brought on behalf of investors in Barclays’ American depositary shares to go forward.

The share price slid 7.4 percent last June 26 after New York Attorney General Eric Schneiderman accused Barclays in his own lawsuit of concealing how it favoured high-speed traders in its dark pool, known as Barclays LX, and understated their activity.

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FHA beefs up foreclosure prevention initiatives

The U.S. Department of Housing & Urban Development and Federal Housing Administrationhave announced significant changes to its Distressed Asset Stabilization Program.

Loan servicers will now be required to delay foreclosure for a year and to evaluate all borrowers for the Home Affordable Modification Program or a similar loss mitigation program.

HUD is also making additional improvements to the Neighborhood Stabilization Outcome sales portion of DASP which are aimed at increasing non-profit participation. Updates include giving non-profits a first look at vacant properties, allowing purchasers to re-sell notes to non-profits, and offering a non-profit only pool.

“These changes reflect our desire to make improvements that encourage investors to work with delinquent borrowers to find the right solutions for dealing with the potential loss of their home and encourage greater non-profit participation in our sales,” said Genger Charles, Acting General Deputy Assistant Secretary, Office of Housing. “The improvements not only strengthen the program but help to ensure it continues to serve its intended purposes of supporting the MMI Fund and offering borrowers a second chance at avoiding foreclosure.”

Read on.