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Deutsche Bank has denied training employees to engage in market manipulation after a former trader who was convicted of fraud accused the German lender of teaching him to use an illegal trading strategy.
James Vorley, a former London-based commodities trader at Deutsche, is suing the bank for £12mn in London’s High Court over claims he was taught and instructed by more senior employees at the lender to trade in a way that exposed him to criminal prosecution in the US.
Vorley — who has always maintained his innocence — was convicted of wire fraud in federal court in Illinois in 2020. He was sentenced to 12 months and a day in prison for “spoofing” the futures market for gold and silver between 2008 and 2013.
Spoofing is a practice that involves quickly placing and withdrawing buy and sell orders to give other traders in the market a false impression of demand. It became illegal as part of the 2010 Dodd-Frank Act in the US.
The case underlines how Deutsche is still struggling to shake off some longstanding legal issues, despite its management spending years trying to repair the bank’s reputation and paying costly settlements and penalties.
According to court filings in London, Vorley alleged that he was told to “trade in a manner that, unknown to him, exposed him to civil and criminal proceedings in the US” while working at Deutsche.
He claimed that the bank did not tell him or others that using such trading strategies “might amount to unlawful market manipulation”.
“On the contrary, at various times during the course of his employment with [Deutsche] he was instructed to trade in this way by multiple traders,” lawyers for Vorley alleged.
The former precious metals trader is suing Deutsche on the grounds it breached a “duty of care to train him to use trading strategies” that did not expose him to prosecution.
In its defence filing to the lawsuit, Deutsche denied the allegations, saying Vorley was given “all appropriate training” and “knew or ought to have known that he should not have committed fraud”.
“It is denied that [Deutsche] supervised, instructed or trained [Vorley] to engage in any trading strategy that was contrary to its policies or unlawful,” the bank said.
It added that if more senior staff taught Vorley or others to use nefarious trading strategies, “any such teaching was informal and not endorsed or otherwise approved” and “was not known” to the lender.
Vorley claimed he was “entitled to and did reasonably assume” that “any training which was provided by or sanctioned by other more senior employees of the bank had been approved by the bank”.
Deutsche is facing a separate £660mn lawsuit by four former senior investment bankers seeking damages in connection with a probe by Deutsche that contributed to their convictions by an Italian court in 2019.
The Frankfurt-based lender, which no longer has a significant commodities trading business, has paid more than €15bn in fines and settlements since 2012.
Deutsche said: “We reject the claim and are defending ourselves against it. The bank had, and still has, a very clear market conduct policy which was made clear to employees at the time, and which warned that market manipulation is illegal as well as against bank policy.”
Lawyers for Vorley declined to comment.