Deutsche Bank unit pleads guilty in U.S. Libor-rigging case

A Deutsche Bank AG unit pleaded guilty to wire fraud in connection with its role in the manipulation of benchmarks used to set interest rates on trillions of dollars of debt, including credit cards and mortgages.

The guilty plea Thursday in federal court in Hartford, Conn., was part of an agreement to end U.S. and U.K. probes into the bank's role in the rigging of the London Interbank Offered Rate (LIBOR), under which Deutsche Bank was ordered to pay a $2.5 billion fine.

Some Deutsche Bank Group Services employees "engaged in a scheme to defraud" from 2003 to 2010, Steven Reich, the bank's general counsel for the Americas, told U.S. Magistrate Judge Donna Martinez. They "were acting under the supervision of DB GS and in part for DB GS."

The Associated Press reported that the penalty includes $600 million to New York, $800 million to the Commodities Futures Trading Commission, $775 million to the U.S. Justice Department, and about $340 million to Britain's Financial Conduct Authority.

The admission by the bank's London unit was made in a small federal courtroom, where three assistant U.S. attorneys led by Jennifer Saulino from the criminal fraud section in Washington occupied the government table.

"The traders, including a manager, sought to influence the process in order to benefit their trading positions to increase profits and decrease losses," Saulino told the judge.

Martinez accepted the guilty plea and set a sentencing date for July 7, when she will formally impose the penalties.

The judge also approved a deferred-prosecution agreement Deutsche Bank and the U.S. struck, under which the bank will pay a penalty and accept the appointment of a corporate monitor. As long as the bank abides by the rules of the agreement for three years, it will not be prosecuted.

The group services unit was fined $150 million, while the parent firm agreed to pay a $625 million penalty, the amounts being part of the total of $2.5 billion in penalties and disgorgements assessed against the bank.

Deutsche Bank's lawyers declined to comment after the hearing.