On 23 April 2015, the Financial Conduct Authority imposed a financial penalty of £226m on Deutsche Bank AG in accordance with section 206 of the Financial Services and Markets Act 2000. The penalty was imposed because of Deutsche Bank’s attempted manipulation of the IBOR rates, system and control failings and deficiencies in the way the bank dealt with the FCA.
The FCA’s Final Notice did not name any of the individuals involved in the case. In the Deferred Prosecution Agreement statement of facts, a number of individuals are named, with others referred to in terms such as “SB Employee H”.
Both settlements create a problem for individuals who are named, or can be identified in documents arising from the agreements, but do not have the right to defend themselves.
It has been reported that a number of cases against the FCA are in progress where former traders have alleged they have been identified in proceedings. In FCA proceedings, identified individuals have a right to make representations before findings are published. The FCA are also required to disclose relevant evidence. In November, former Deutche Bank trader Christian Bittar was successful in a tribunal hearing that found the FCA had identified him when fining the bank.
Individuals identifiable in DPAs find themselves in an even worse position. Unlike the position in FCA proceedings, the legislation providing the framework for DPAs makes no provision for the rights of third parties.
While this problem was perhaps unforeseen in the drafting of the Crime and Courts Act 2013, it does present a real problem for individuals, who may lose their professional reputations and employment prospects. While both the court and the prosecution can avoid naming any individuals directly, a problem remains when the individual can clearly be identified simply by the terms of the agreement. Perhaps the first amendment to the DPA legislation will enable relevant third parties to make representations.
To read more about Deferred Prosecution Agreements, see the practice note, Deferred Prosecution Agreements: overview.
To read more about the FCA’s enforcement regime, see the practice note, FCA enforcement regime, overview.