By Eyk Henning
FRANKFURT-- Deutsche Bank AG and four of its former traders agreed at a court hearing Friday to pursue an amicable resolution to controversy over their suspension early last year.
The move came after Judge Astrid Nungesser warned that she sees risks for both parties if they don't agree to conciliatory proceedings.
Deutsche Bank in February 2013 suspended the four currency traders for improperly communicating internally about lending rates between banks.
According to court documents reviewed by The Wall Street Journal, the bank claims the traders appeared to take each others' derivative positions into account when making submissions for the London interbank offered rate, or Libor, a key interest-rate benchmark. Doing so would violate the bank's internal rules. Pushing Libor in one direction could help to increase the value of derivative positions.
The traders last summer appealed their suspensions. In September a lower Frankfurt labor court forced Deutsche Bank to reinstate the traders to their original positions. The court ruled that the dismissals weren't justified because the bank didn't have proper internal rules and controls in place and didn't ensure adequate separation of rate submitting and derivatives trading.
The court also ruled that all four men were also entitled to receive outstanding remuneration totaling almost EUR2 million ($2.7 million).
The bank appealed that verdict, which automatically took the case to the higher court under Judge Nungesser. Commenting on the risks for Deutsche Bank at Friday's hearing, Ms. Nungesser cited statements from the lower court, which said the lender hadn't informed its labor representatives properly about the traders' suspensions.
She also pointed to statements made at the lower court regarding a video statement from Deutsche Bank's Alan Cloete, who at the time was head of foreign exchange and global finance. According to one of the traders, Ardalan Gharagozlou, Mr. Cloete in a video chat on Feb. 6, 2012, told him that he wants to "close that box [the traders' inappropriate communication about Libor] without causing a stir." At the hearing last year, Mr. Gharagozlou said also claimed Mr. Cloete told him that his bonus payments would be cut as a punishment but might be recouped afterward once the case calmed down. While Mr. Cloete denied having made these statements, the four traders' lawyer, Peter Rölz, said the comments suggested that they might continue to work in the same position.
Because the bank didn't reinstate the traders to their original positions, as ordered by Frankfurt's lower labor court, but in different positions, it was ordered to pay more than EUR100,000 as a compulsory enforcement fine to the government, people familiar with the matter said. A spokesman for the bank declined to comment.
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(END) Dow Jones Newswires
July 18, 2014 09:38 ET (13:38 GMT)
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