Lawyers from several firms have announced plans to file a new class action lawsuit against Deutsche Bank on behalf of companies, investors and central banks over its alleged misuse of high-speed trading technologies in foreign currency markets. The new lawsuit, to be filed in London mid-year, echoes a similar lawsuit filed in New York last month by many of the same firms. The lawsuits highlight the risks and vulnerabilities associated with high-speed trading practices and the potential for exploitation by powerful market players. Deutsche Bank has denied any wrongdoing and indicated that it will defend itself against the allegations in court.
Customers shortchanged
The bank is accused of using trading software Autobahn to capitalise on millisecond fluctuations in foreign exchange rates, often at the expense of the bank's customers. In a market where even momentary changes in currency rates can have an enormous ripple effect on investments, it is alleged that Autobahn would sometimes delay trades by as long as hundreds of milliseconds in order to secure an advantageous rate for the bank. 'Deutsche Bank exploited its superior bargaining position and superior knowledge' in order to generate profit by shortchanging customers, the New York lawsuit alleges.
Unknown scale
It is as yet unclear just how large a bill Deutsche Bank's customers may have footed for the alleged misconduct, as the circumstances surrounding individual trades are obscured by the intricate workings of the Autobahn software. However, complainants in the New York lawsuit will seek a court order for Deutsche Bank to turn over records that would help qualify the extent of customer losses. According to Hausfeld lawyer Christopher Rother, one of the lawyers involved in the New York class action, the financial fallout for customers may have numbered in the billions. Source: The New York Times
Email your news and story ideas to: [email protected]
