Deutsche Bank Securities Inc. (DBSI) and Deutsche Bank AG (DBAG) have responded to accusations about market manipulation. On October 25, 2021, Deutsche Bank argued that the Court has to dismiss the complaint against it for failure to state a claim.
Let’s recall that the plaintiffs bring a consolidated class action Complaint for alleged manipulation in violation of the CEA, among other related claims. In bringing their claims, the plaintiffs rely on DBSI’s June 18, 2020 Offer of Settlement with the CFTC.
The CFTC Order describes two Tokyo-based traders affiliated with DBSI that allegedly engaged in isolated incidents of spoofing activity in UST/EDF transactions in violation of Section 4c(a)(5)(C) of the CEA during calendar-year 2013. DBSI neither admitted nor denied the allegations in the CFTC Order, and DBAG is not referenced in the CFTC Order at all.
Deutsche notes that the Complaint provides no specific details of the plaintiffs’ transactions in the U.S. Treasury or Eurodollars markets or how they interact with the handful of alleged spoofed trades referenced in the CFTC Order. It only otherwise points to prior “regulatory actions taken against defendants in other markets,” – markets unrelated to the CME or CBOT markets at issue here.
As the Court observed, “plaintiffs here identify no trading-related losses they suffered from defendants’ alleged spoofing on any particular day. Rather, they plead that they likely lost money in at least one of their trades because they regularly traded Treasury and Eurodollar futures in 2013… These allegations raise legitimate concerns about whether any plaintiffs have alleged enough to demonstrate standing.”
Deutsche says that the Complaint contains no allegations regarding any specific transactions by the plaintiffs in U.S. Treasury or Eurodollar futures or how those transactions interacted with the alleged spoofed trades referenced in a CFTC Order in which DBSI neither admitted nor denied the allegations.
Instead, Deutsche says, the plaintiffs continue to rely solely on the generalized allegation that the plaintiffs engaged in UST/EDF transactions at a time when Deutsche had a “culture of manipulation.”
According to the defendants, the plaintiffs never allege when their trades occurred, how those trades were in any way affected by Deutsche’s alleged misconduct, or whether the effect on plaintiffs’ transactions was negative. These types of general allegations of trading—without specifying the product, the market, or the transaction—do not establish Article III standing.
Deutsche requests that the Court dismiss the Complaint for failure to allege Article III standing and reject Plaintiffs’ request for early discovery.
The lawsuit continues at the Illinois Northern District Court.