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Russia alleges Deutsche employee manipulated markets with 300 billion roubles of trades
December 20, 2016 / 6:03 PM / a year ago

Russia alleges Deutsche employee manipulated markets with 300 billion roubles of trades

MOSCOW (Reuters) - Russia’s central bank alleged that a banker for Deutsche Bank’s (DBKGn.DE) Russian operation had manipulated markets by conducting 300 billion roubles (3.96 billion pounds) of trades with relatives over two and a half years.

People walk past the Central Bank headquarters in Moscow, Russia, April 29, 2016. REUTERS/Maxim Zmeyev/File Photo

The central bank said the trades, made between January 2013 and July 2015, generated a profit of 255 million roubles for former Deutsche Bank equity trader Yuri Khilov and three relatives.

The Russian central bank said it had passed its findings to law enforcement for their assessment of what had happened.

Valery Lyakh, from the central bank’s market violations monitoring department, said Khilov and relatives could be responsible for as much as 500 billion roubles of market manipulation but that the central bank had confined its investigation to 2013-2015.

Lyakh said the central bank supposed it knew where Khilov was but declined to elaborate at a news conference.

A Deutsche spokesman said the bank had conducted an internal investigation into the activities of Khilov and had provided its findings to the market regulator. Deutsche will cooperate closely with authorities, the spokesman said.

Khilov did not respond to a message seeking comment.

The Russian central bank’s investigation was conducted with help from Germany’s Federal Financial Supervisory Authority.

It is separate from an investigation into so-called “mirror trades” involving Deutsche’s Moscow office which could have allowed clients to move money from one country to another without alerting authorities in 2014.

    The Russian central bank’s findings are an embarrassment for Germany’s flagship lender, which recently cut back its investment banking activities in Russia.

    Deutsche will probably escape a fine from the Russian regulator over the trades involving Khilov because of the amount of time that has passed since the trades were made. But law enforcement officials are yet to make their position clear.

    The German bank is facing a large penalty in the United States for allegedly misleading investors when selling mortgage-backed securities.

    The Russian central bank alleges that Khilov and his relatives manipulated trading in eight securities on the Moscow Exchange, including the ordinary shares of Russia’s Gazprom (GAZP.MM) and Nornickel (GMKN.MM) as well as the preferred and ordinary shares of Sberbank (SBER.MM).

    Khilov made trades which were favourable to his relatives and in doing so manipulated markets, the central bank said.

    Additional reporting by Olga Popova and Katya Golubkova; Editing by Andrew Osborn and Adrian Croft

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