Former Deutsche Bank swaps trader fined $350,000 for trying to hide trading losses

Jacob Bourne, a swaps trader and managing director at Deutsche Bank, mismarked swaps valuations to try and conceal losses.

A former managing director and swaps trader at Deutsche Bank has been handed a fine of $350,00 by the US derivatives regulator, after being caught out trying to conceal significant trading losses.

The US Commodity Futures Trading Commission (CFTC) said in a statement that in June and July last year, Jacob Bourne purposefully mismarked the valuations for inflation swap instruments in an attempt to hide the estimated trading losses from Deutsche Bank.

Germany’s largest investment bank has a policy in place which outlines the method for entering end-of-day markets into a spreadsheet which is used for internal valuations, but the CFTC added that Bourne had ignored the policy.

Deutsche Bank confronted Bourne on his actions after the mismarked swaps were reported to swap counterparties and the CFTC, but he tried to alter historical versions of the valuations spreadsheet to make it look as though he had complied with the bank’s internal procedures.

“Effectively combating fraud and manipulation in the global derivatives markets necessitates a strong working relationship between international regulators,” said CFTC chairman, Christopher Giancarlo.

“That is why the CFTC is grateful to have an open line of communication with BaFin (Bundesanstalt für Finanzdienstleistungsaufsicht) about this case, and others. We will continue to prioritise cooperation with our international partners, and are appreciative of BaFin’s readiness to engage with the CFTC.”

The CFTC also said that it has issued its first public declination letter to Deutsche Bank, effectively closing its related investigation into the bank’s actions to identify Bourne’s fraudulent activities.

“With this action, the Commission shows its continued commitment to holding accountable those who engage in misconduct in our markets. Today, we also recognise once again the concrete benefits of self-reporting, cooperating, and remediating,” James McDonald, CFTC’s director of enforcement, concluded.

“The self-report here allowed the Commission to hold the responsible individual accountable. Notably, Deutsche Bank’s self-report stemmed from its discovery of the issue through its existing compliance program and internal controls. And the self-report was accompanied by full and proactive cooperation and remediation. All of these factors contributed to our decision to decline to recommend charges against Deutsche Bank.”