Deutsche Bank fails to dismiss U.S. currency rigging lawsuit

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By Jonathan Stempel

<span class="articleLocation”>A U.S. judge has rejected Deutsche Bank AG’s bid to dismiss a lawsuit claiming it delayed foreign
exchange trades to get a “last look” at how prices were moving,
enabling the German bank to extract more profit at customers’
expense.

In a decision made public on Tuesday, U.S. District Judge
Lorna Schofield in Manhattan said investors led by Axiom
Investment Advisors LLC may pursue breach of contract claims
over trades on Deutsche Bank’s “Autobahn” platform and on
multi-dealer electronic communications networks, or ECNs.

The decision came almost a year after Barclays Plc
agreed to pay $50 million to settle a similar lawsuit by Axiom
over the British bank’s own trading platform.

Both banks are among many that have been sued or accused by
regulators of rigging prices within the roughly
$5.3-trillion-a-day foreign exchange market.

Deutsche Bank spokesman Troy Gravitt declined to comment.

Axiom alleged that starting in 2003, Deutsche Bank arranged
for algorithms used by Autobahn and other ECNs to delay trade
processing by at least several tenths of a second.

The New York-based firm said this enabled Deutsche Bank to
reject trades whose terms it disliked, or to change the prices,
costing investors millions of dollars.

In her decision, Schofield said Autobahn’s terms of service
were ambiguous as to whether a binding agreement to trade arose
when a customer’s trade instruction was executed, permitting
Deutsche Bank a last look, or received from the matching
algorithm, not permitting a last look.

She also said the service agreements for other ECNs could
not be considered in deciding the motion to dismiss because they
were made between Deutsche Bank and the ECN operators, and there
was no evidence that Axiom agreed to their terms.

The judge also said Axiom can pursue an unjust enrichment
claim, but dismissed claims under New York consumer protection
laws because currency trading was “not consumer-oriented
conduct.”

George Zelcs, a lawyer for Axiom, in an email said the
decision allows his client to keep pursuing “last look” claims
on behalf of other investors, ahead of a possible trial.

The case is Axiom Investment Advisors LLC v. Deutsche Bank
AG, U.S. District Court, Southern District of New York, No.
15-09945.



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