In 2011 we initiated a series of claims in Spain against Deutsche Bank for the improper commercialization of speculative derivative products, very risky and totally inappropriate for non-professional clients of the financial markets, which the entity has been commercializing at least since 2006, as type hedges of change with supposed great advantages and better cost: Leverage Fade in Forward Transaction, Resurrecting Leverage Fader Forward, American KIKO, Sliding Leverage Knock in Forward, Leverage European Knock in Forward, Windowed Knock-in Currency Option, TARF or TPF, PIVOT-TPF, etc. Denominations of OTC financial products, flashy and sophisticated, designed, marketed and calculated by Deutsche Bank, which only hide great risks.
The asymmetry (difference in knowledge between the client and the financial professional) and the lack of adequate control measures, which Forbes magazine qualified already in 2015 (taking the term coined by Margaret Hefferman), from "willful blindness" or "willful blindness”Of the entity, applicable to the commercialization of these products - let us not forget that it generates enormous benefits (with the evident conflict of interest) -, has made it possible - despite the increasing regulatory restrictions of national and community regulators-, These ultra-complex and impossible-to-calculate products were marketed to clients with an inadequate profile, without sufficient or no information or experience about them and their risks, inducing them to make investment decisions without knowledge of the facts, and well above their risk, which ended in dramatic losses.
This, without counting the performance, by some operators of the entity, of sophisticated operations to generate additional commissions and bonuses for cancellation and contracting of the same; of covert restructurings that concealed and exacerbated risks and losses; the impact of hidden commissions, structured in the price of the products and not informed to the client; the marketing of products at supposed "zero cost", when in reality they entailed serious losses in cancellation and contracting; or other irregular practices in its commercialization.
Even though the implementation of the requirements and demands of the MiFID II Directive and the EU PRIIPs Regulation, and the entity's own ethics, should have put an end to this type of conduct, we have detected that the lack of adequate control measures and prevention has continued to make them possible.
It will certainly not be a widespread practice, and perhaps only a few do. Perhaps they are practices carried over from an earlier era, or perhaps they continue to be carried out because it has become entrenched in some of its operators. But each time we attack them, we cannot help wondering why and how it is possible that the entity's mechanisms “allow” or “enable” this type of endemic misconduct that has been developing for years; why, despite the evidence and the coincidence of participants, the entity always uses the argument of "market movements", volatility, or directly to blame the client, despite the obvious misconduct of its employees. How dare the entity, once detected, to offer new riskier products to restructure those losses, or granting loans, as the only solution for the client to assume the payment of losses caused by the entity's employees. Why don't you reimburse hidden costs or losses? Why does the entity cover and not eradicate these behaviors? This, despite the many years that we have been successfully revealing these behaviors, with claims and before the Courts.
Last Monday, January 25, Stephen Morris and Olaf Storbeck from the Financial Times, whose article I recommend reading (click here. to access Mr. Morris's tweet), uncovered the existence of an internal investigation by the investment bank of the Deutsche Bank Group, to find out if its staff improperly sold sophisticated investment products to clients in breach of European regulations, possibly as a result of our claims , and, perhaps of those of others affected. The BaFIN (Federal Financial Supervisory Authority) and the ECB are behind this investigation and are also demanding explanations.
Deutsche Bank's research has been called internally, very significantly, “Project Teal”. And it is that, the code in code "Teal", refers to the degree of perfection that an organization's management can achieve. The "Management Teal" is one in which the entity's management would evolve to develop the self-management of each department, active listening by the management and the perception of what is happening around it to develop the full potential of the company. But above all, what defines it is the integrity at all levels.
We want to think that the new management of the Deutsche Bank Group, headed by Christian Sewing wants, therefore, to end these practices and the way of marketing investment products and exchange rate hedges, sincerely and definitively. But, again, it has had to be the pressure of claims, such as those led by this firm, and the risk of uncovering this conduct, which affects the very essence of Deutsche Bank's investment business, which has forced the entity to open an investigation at the international level, to "formalize" and visualize before financial supervisors that, perhaps now, measures are being taken.
Gone, however, will be companies that have undergone and are experiencing great difficulties due to the unbearable losses suffered; Directors, Managers and Financial Directors who had to face the shame and unfair personal and professional discredit, and were even blamed by their companies, for having hired what they "did not understand", very risky products when looking for coverage, trusting who they advised: the world's number one investment bank, Deutsche Bank.
Let's hope that the entity, beyond rectifying and solving its internal problems, duly compensates those affected without delay, who would never have contracted these products if they had known what they were contracting, their risks and the hidden reality of the operation. Unfortunately, we fear that, as has happened to date, the investigation is only an appearance, and it is necessary to continue fighting and claiming the right of our clients to recover their losses.
I reiterate my interest in reading the interesting article by Messrs Morris and Storbeck in the Financial Times. It will attract the attention of more than one.
Link to Stephen Morris tweeter (Financial Times)
I also leave a link to the publication of Cinco Días that echoed it.
"Deutsche Bank investigates whether it sold products in Spain improperly"
