Claims and Class Actions against Interest Rate Swaps

Class Actions

The Class Actions Lawsuits against Deutsche Bank and RABOBANK demand the retroactive nullification of their Interest Rate Swap Contracts due to Deutsche Bank and Rabobank’s LIBOR and EURIBOR-Fraud and Manipulation and it seeks relief of damages including for those caused by their tortious acts consisting of their Grave Violations of the Duty of Care, as well as their Fraudulent Misrepresentations, Misleading sales-pitch of Swaps and Unlawful Raises of Interest and Premiums.

Deutsche Bank and RABOBANK’s LIBOR & EURIBOR FRAUD and Manipulation

Deutsche Bank and RABOBANK’s proven Fraud and Systematic Manipulation of the LIBOR/EURIBOR first resulted in a rise of interest rates starting 2006. Since 2009 this fraud and manipulation resulted in Significant Lower Interest Rates, which turned out to be structural since then and which have caused severe damages for many Entrepreneurs, including Farmers, who have entered into Interest Rate Swap Contracts with Deutsche Bank and RABOBANK.       

Deutsche Bank was found guilty in December 2013 by the EU-Commission as well as in April 2015 by the British Financial Conduct Authority and two US-regulators, the Commodity Futures Trading Commission, the CFTC and the Department of Financial Services (DFS) of New York of FRAUD, False Reporting and Systematic Manipulation of LIBOR and EURIBOR. Twenty nine of its employees were involved in this rate-rigging. Deutsche Bank didn’t set up a formal policy to prevent similar misconduct until mid-2013, long after authorities had started filing criminal charges against banks and individuals for their roles in the Libor scandal. Contrary to other banks on the LIBOR-panel, Deutsche Bank was criticized for its failure to fully cooperate with British & U.S. authorities. Throughout the investigation, Deutsche Bank executives, including the current co-CEO Anshu Jain, reiterated they were fully cooperating with government authorities. Mr. Jain was the Head of Deutsche Bank’s investment bank in  London until May, 2012. The misconduct occurred in this London-unit. The U.S. Commodity Futures Trading Commission said Deutsche Bank showed reluctance right from the start of the investigation, thereby causing the slowing down of the investigations.

The U.K.’s Financial Conduct Authority was less mild and lashed out at Deutsche Bank for even repeatedly misleading them. The FCA accused Deutsche Bank of lying about its supposed inability to hand over a report produced by a German regulator. The FCA said the bank destroyed almost 500 tapes of recorded phone calls after it was instructed to preserve evidence related to the investigation. Besides this did Deutsche Bank provide false information to the FCA about whether certain other records existed. An illustrative a quote from email chats of Deutsche Bank traders said that the benchmarks were: “..a corrupt fixing and DB is part of it!”.

RABOBANK was found guilty of Fraud, False Reporting and Systematic Manipulation of LIBOR and EURIBOR from 2005 until early 2011 by the US/Department of Justice on the 29th of October, 2013. Thirty current and former employees of the Dutch lender were involved. It was such a common practice that RABOBANK even placed traders and LIBOR/EURIBOR submitters in shared office space so that requests to manipulate LIBOR/EURIBOR could be made quickly and verbally. In total, RABOBANK was fined for nearly $1.1 Billion for its fraudulent and collusive conduct, thereby buying off criminal prosecution. A condition for this settlement was that RABOBANK is not allowed to deny these charges.

LIBOR & EURIBOR are fundamental and crucial parts of Interest Rate Swap Contracts. Deutsche Bank and RABOBANK’s clients who entered into Interest Rate Swap Contracts were under the assumption that LIBOR/EURIBOR were objectively determined standards of interest rates on the global market and thus that their rates would be reliable benchmarks.

Interest Rate Swap Contracts entered into between 2005 and 2010 have a fixed Interest Rate ranging from 2.5% to 5% . Since 2006 the rates first went up from 2% to 4.5%. Starting November 2008 the LIBOR/EURIBOR-rates tanked to about 1% in early March of 2009. In June of 2009 LIBOR/ EURIBOR structurally went  under 1%, with the exception of April-October 2011 when it was just above 1%. After that it structurally went below 0.5% and then under 0.2%. In October, 2014 it was at 0.14% and in November, 2014 it went below 0%.

Deutsche Bank’s and RABOBANK’s Fraud and Systematic Manipulation means that their clients who have an Interest Rate Swap Contract with a Term which includes the years 2005-2011 have been exposed to paying a huge difference of 2% – 5% between their fixed Swap-Contract-rate and the LIBOR/EURIBOR. Deutsche Bank and RABOBANK’s clients have been exposed to this unlawful and fraudulent conduct and its negative consequences and damages it has inflicted upon them.

Therefore these clients have not been able to benefit from the tremendous decrease of the variable interest rates over the last 6 years, but instead have been stuck with paying huge and unjustified quarterly interest-installments on their Swaps that are based on fixed rates. Deutsche Bank and RABOBANK on the other hand have been benefitting in an enormous manner because they only needed to pay their clients the variable interest rate according to LIBOR and EURIBOR, which they also manipulated downwards themselves. These clients would have never entered into such Interest Rate Swap Contracts had they known about this Fraud and Systematic Manipulation.

Due to the heavy decrease of interest rates since the beginning of 2009 that were instigated by the LIBOR/EURIBOR Fraud and Systematic Manipulation, the Interest Rate Swaps have developed a Negative Market Value. Thus, Deutsche Bank and RABOBANK regarded this as a liability and listed it as such on the balance sheets of those clients. Deutsche Bank and RABOBANK then considered this to be a reason to label such businesses as less solvent and therefore lowered their Credit Rating (TIF). Deutsche Bank and RABOBANK have been using this as a reason to invoke Terms of the Swap-Contract consisting of high penalties for those businesses whereby they imposed a number of Premiums on the Swap, on the attached loan, or on the interest rates of their current account. The reasons for invoking these penalties are hidden in the Terms in vague for the bank carte blanche verbiage and in most cases were never properly disclosed to the client beforehand.

Besides this there were other “serious failures” in the sale of Interest Rate Swaps of Deutsche Bank and RABOBANK to small-businesses, including many to farmers. One of those serious failings was the poor disclosure of the exorbitant Exit Costs (almost TWICE as high as with normal fixed rate loans). Deutsche Bank and RABOBANK also applied non-advised sales straying into advice, encouraged “over-hedging” (where amounts and/or duration did not match the underlying loans), used rewards and incentives to drive these practices, applied “take-it-or-leave-it-pressure” on its clients for having to attach an Interest Rate Swap Contract to the additional loans they needed thereby causing swap-contracts under duress and did not always properly disclose and emphasize all the risks to its clients.

This conduct resulted in that such Entrepreneurs, including many Farmers, have become Deutsche Bank and RABOBANK’s “cash-cows” with their backs up against the wall. These Entrepreneurs have thus been at the mercy of Deutsche Bank and RABOBANK to be able to sustain and grow their businesses.

Summary of the Legal Basis of the Class Actions against Deutsche Bank and RABOBANK 

1. LIBOR & EURIBOR FRAUD and Manipulation

RABOBANK’s Fraud and Systematic Manipulation with LIBOR/EURIBOR mean that under Dutch Law Businesses who have entered into an Interest Rate Swap Contract with RABOBANK between 2005–2011 have a justified cause of action to sue RABOBANK for Fraud, Deception, and Fraudulent and Material Misrepresentation and demand that the Swap-Contracts are nullified. This is the legal basis for the claim for relief of damages inflicted upon the aggrieved parties with an Interest Rate Swap-Contract.

In 2001 and 2009 the Dutch Supreme Court (the ‘Hoge Raad’, the highest court in The Netherlands) ruled that in case of Fraud, Deception, and Fraudulent and Material Misrepresentation there is a “lack of will” due to which Contracts in general are invalid and can be nullified by the Court. For the Interest Rate Swaps sold by RABOBANK between 2005-2011 it is grounds for the nullification of the entire Swap-contract. This nullification of RABOBANK’s Swaps will be demanded in this Class Action.

German Law has identical legal principles; Fraud, Deception, and Fraudulent and Material Misrepresentation lead to a substantial mistake for the aggrieved party and mean that the contract can therefore be nullified. Therefore the same applies to Deutsche Bank’s fraudulent and tortious acts. The German Court will be demanded to nullify the Swaps of Deutsche Bank as well.

2. Violations of Dury of Care, Fraudulent Misrepresentations, Misleading Sales-pitch & Unlawful Raises of Interest and Premiums

The Misleading sales-pitch, Fraudulent Misrepresentations during Swap-Contract Negotiations and advices of Deutsche Bank and RABOBANK employees have constituted numerous grave Violations of the Duty of Care and Fraudulent Misrepresentations. This resulted in one of the Unlawful Acts which consisted of the Unlawful Imposing of Premiums and Raises of Interest Rates of the Swaps. The harmed Entrepreneurs were totally unaware this could be unleashed on them. Also in this way have Deutsche Bank and RABOBANK misled Entrepreneurs into paying too much Interest.

Fraud, Deception, and Fraudulent and Material Misrepresentation is also solidified by the fact that the Deutsche Bank and RABOBANK should have known about the ongoing manipulations (29 and respectively 30 of their employees were involved) and should have understood that this information was of the utmost importance for the businesses with Swaps Contracts to be aware of. Withholding that information is Unlawful and Fraudulent, as it was merely for Deutsche Bank”s and RABOBANK’s own benefit. Such Deliberate Silence is considered a fraudulent act and therefore cause for nullification of the Swap-Contract. That co-Ceo of Deutsche Bank mr. Anshu Jain was “unaware” of the wrongdoings at the unit he oversaw can only be labelled as a blatant lie.

Since the end of 2008/early 2009 the manipulated drop of the LIBOR/EURIBOR caused businesses with Swap-Contracts to pay dearly for 7 years now. Such conduct is the same as theft. The nullification based on Fraud, Deception, and Fraudulent and Material Misrepresentation will mean that all interest payments– done by both parties– should be reversed and other inflicted damages on the clients compensated.

These Violations and Unlawful Acts can be invoked by harmed entrepreneurs with current, elapsed or exited Interest Rate Swap-Contracts.

In The Netherlands there have been various Judgements by the Courts in recent years which ruled against RABOBANK due to these unlawful acts and ordered them to pay the damages of its clients.

Another significant and clear indication that the aggrieved parties have a cause of action is that the Dutch banks, and especially RABOBANK, are in panic about Class Action-Lawsuits like these because they recently, on October 14th, 2014, have tried to obtain an exemption and protection against any Class Actions that may be initiated against them, such as those for Interest Rate Swaps, which the Dutch government wisely denied.  RABOBANK openly supported this attempt.

In Germany the German Supreme Court ruled in 2011 in a case against Deutsche Bank that they violated their Duty of Care and committed Fraudulent Misrepresentations. The German Supreme Court terefore ordered Deutsche Bank to compensate 100% of the damages its client had suffered.  Many similar cases with identical results have followed since then. These cases were mostly against Deutsche Bank.

GO HERE for a Summary of what the Damages can consist of.

Dutch Law provides that any foreign party anywhere in the World can join this Class Action Lawsuit against RABOBANK in The Netherlands ! 

Dutch Law consists of provisions in its civil litigation rules that provide the possibility for foreign parties to join and enter into this Class Action in The Netherlands. It so seems that the dutch Class Action system is the most sophisticated Class Action system in Europe. Especially Plaintiffs against RABOBANK’s Swaps originating from the USA can find comfort in the fact that the Dutch Class Action system is based on the US Class Action system. A good number of Class Action-cases involving Plaintiffs from all over the world have already been succesfully adjudicated and ruled by the Dutch Courts in favor of all the Plaintiffs.

Feel free to ask us for a Summary of what the Dutch Class Action system consists of.

RABOBANK’s Global Headquarters, the entity that is ultimately responsible and liable for this FRAUD, Deception, and Fraudulent and Material Misrepresentation, is also located in The Netherlands. Therefore any party who has been aggrieved concerning its Interest Rate Swap Contract with the RABOBANK because of the Fraud and Systematic Manipulation of  RABOBANK, can join this Class Action of the Foundation ‘Stichting Renteswapschadeclaim’ to seek relief of damages.

Details of the Class Action against Deutsche Bank and its Interest Rate Swaps will be released soonest

To find out how to Join these Class Actions go to: Join

 

 

 

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