Back in October 2008, Alexander Vik went to the London office of Deutsche Bank AG to meet with account managers regarding his Sebastian Holdings Inc investment fund. He even received congratulatory remarks for the success of his firm.
After a month, the global markets fell into crisis, the same account managers required that Vik pay US$530 million against the currency bets of the fund. They also required the fund to liquidate its positions.
Now, the case is in trial in London courts as Vik filed suit against the bank for its actions would result in losses as well as missed profits that total US$2.5 billion. A magistrate would have to reach a decision on whether Sebastian Holding's calculations on lost trading gains is valid and accurate.
This is but one of the legal issues faced by the German bank that can ultimately affect its profitability. The bank has already increasedits litigation reserves to Eur2.4 billion or US$3.1 billion. The fund is supposed to cover the lawsuits for US mortgage cases as well as the other regulatory inquiries the bank faces, such as carbon credit trading and interest rate manipulation.
Join the Conversation