Translated material
The crisis brought to court
Deutsche Bank accused of fraud
The American bank M&T sued Deutsche Bank, accusing it of concealing information about securities that subsequently caused losses. Thus, the search for those responsible for the global financial crisis may spread from rating agencies to direct market participants.As Western media note, on Monday M&T Bank, one of the co-owners (owning 6% of the bank) of which is the famous investor and billionaire Warren Buffett (pictured) , filed a lawsuit against the largest financial institution in Germany in the federal court of New York. The Americans accuse Deutsche Bank of fraud, as a result of which M&T lost about $82 million. The lawsuit states that Deutsche Bank withheld information about the quality of collateralized debt obligations (CDO) from rating agencies. In particular, the plaintiff claims that in 2007, Deutsche Bank, together with an affiliated investment fund HBK, sold him securities, assuring them that they were reliable. However, during the mortgage crisis that broke out in the United States last summer, these securities turned out to be unprofitable.
Western politicians and financial authorities have long begun searching for those responsible for the financial crisis, which had such a painful impact on American and European investors. At the end of May, the US Securities and Markets Commission (SEC) announced the launch of an investigation to determine the degree of culpability of rating agencies in the US mortgage crisis. The commission is examining the activities of the three largest agencies and will propose a new set of rules for such companies in early June.
"We have written to Moody's, Standard & Poor's and Fitch asking them to clarify certain aspects of their methodology," said Eric Sirri, head of the SEC's trading and markets division. “We asked them to explain the policy and procedure for identifying errors in the valuation of structured banking products and to inform us about such errors over the past four years, as well as the measures that were taken to eliminate such problems.”
“The financial crisis is approaching its final stage, and many are trying to find the guilty, blaming each other,” notes an analyst at a large Russian investment company. - However, even if the claim is won by the American company, this will not prove anything in a global sense. It is obvious to everyone that the crisis and its prerequisites were not predicted, and appropriate measures were not taken by all market participants. It’s not for nothing that several heads of the world’s largest investment banks resigned.” In total, since the beginning of the crisis, the world's leading banks have written off losses amounting to about $400 billion.
Representatives of Deutsche Bank and HBK Investment have so far refrained from commenting. However, investors appear to be high on the US company's chances of success in this matter. Amid news of the lawsuit, M&T shares rose 1.2% to $78.85 on the New York Stock Exchange.
The American company's profit in the fourth quarter of last year fell by 70%, to $65 million. The American bank M&T was founded in 1856 in New York. The amount of assets under his management in 2007 was $57.9 billion.
Deutsche Bank announced a 45 percent decline in profit for the fourth quarter. For the entire 2007, the financial organization received a net profit of 6.5 billion euros. Deutsche Bank was founded in 1870. It operates its own commercial, mortgage, investment and leasing divisions. There are about 1,500 bank branches in Germany.