Was charged with misleading investors on mortgage securities it sold before the 2008 financial crisis
January 20, 2017: Deutsche Bank AG completed a $7.2 billion deal to resolve US claims that it misled investors on mortgage securities it sold before the 2008 financial crisis, authorities said on January 17.
“This resolution holds Deutsche Bank accountable for its illegal conduct and irresponsible lending practices, which caused serious and lasting damage to investors and the American public,” Attorney General Loretta Lynch said in a written statement. “Deutsche Bank did not merely mislead investors: It contributed directly to an international financial crisis.”
The Frankfurt-based bank announced it had reached an in-principle agreement with US authorities on December 23.
Its stock price hit a record low in September after the bank acknowledged the Justice Department made an opening demand of $14 billion.
The German lender admitted in a 71-page statement of facts that it made ‘false representations’ to mortgage bond investors and omitted material information.
The bank agreed to pay $7.2 billion and admitted to misleading investors. It will pay a $3.1 billion civil penalty and provide $4.1 billion in relief to homeowners.
Deutsche Bank is expected to tap current legal reserves to pay the US fine, potentially reducing pre-tax profits.