Even though it's already the one bank that Brian Moynihan looks at and thinks "I wouldn't run that joint with Vikram Pandit's dick," Deutsche Bank had to be a little surprised at what they found out recently. While John Cryan and his team knew that things had been a little lax and leaky before they took over, they couldn't have been ready for this.
Deutsche Bank AG is investigating a series of trades that may have improperly generated millions of dollars in personal profits, some at the bank’s expense, for a handful of current and former employees, according to people familiar with the matter.
Oh, but it gets better...
Among those who internal auditors believe profited from the trades is Colin Fan, these people said. Mr. Fan was co-head of Deutsche Bank’s investment bank when he left as part of a shake-up in October. The auditors estimate Mr. Fan has made $9 million on a roughly $1 million investment.
Now, you're thinking "Colin Fan? I thought he was Mr. Keep It Clean. How did he pull that off?"
Led by Mr. Fan’s team, Deutsche Bank found a hedge fund to take over the bulk of the risk-offloading part of the deal, according to the people. But the fund didn’t put up all the cash: Mr. Fan and five other Deutsche Bank employees chipped in some of their own money.
But at least Fan is gone, so it won't be too hard to unravel what went wrong here...
The trades, which started in 2009, were meant to remove some of the risk that Deutsche Bank had taken when it made a deal with a large insurance-company client, the people said. Some of the trades continue.
Internal bank auditors are examining whether Mr. Fan and other employees set up the structure to make Deutsche Bank pay an inflated share of profits and fees to themselves and the hedge fund, while locking the bank into high fixed costs, the people said. The internal auditors are also probing whether the compliance review of the structure was adequate, they said.
That sound you hear is John Cryan treating his office like Johnny Depp used to treat hotel rooms.