Deutsche Bank faces a U.S. class-action lawsuit over mortgage-related securities it helped arrange, Germany's biggest lender said in its first-quarter report.
But it tried to distance itself from a whirlwind sweeping Wall Street rival Goldman Sachs by revealing it had not been informed by the U.S. Securities and Exchange Commission (SEC) of any imminent charges.
It said the Federal Home Loan Bank of San Francisco had filed suit regarding the role a number of financial institutions, including Deutsche Bank affiliates, had played as issuer and underwriter of certain mortgage pass-through certificates purchased by the San Francisco-based bank.
In addition, certain affiliates of Deutsche Bank, including DBSI, have been named in a putative class action pending in the United States District Court for the Eastern District of New York regarding their roles as issuer and underwriter of certain mortgage pass-through securities, it said.
On April 5, 2010, the Court granted in part and denied in part Deutsche Bank's motion to dismiss this complaint. Each of the civil litigations is otherwise in its early stages.
As scrutiny of Goldman Sachs gained pace ahead of a U.S. Senate hearing on Tuesday, Deutsche said the SEC had not informed the bank that any charges were pending.
We have not received a Wells notice, Deutsche Bank Chief Financial Officer Stefan Krause told analysts during a conference call on first-quarter earnings.
Regulators send so-called Wells notices to firms or people to alert them of the likelihood that the U.S. government will file an enforcement action against them.
This gives targets the right to argue why they should not be charged by filing a Wells submission.
In its quarterly report, Deutsche Bank reiterated it had got subpoenas and requests for information from regulators and governments concerning its role in the origination, purchase, securitization, sale and trading of asset-backed securities, asset-backed commercial paper and credit derivatives.
This included residential mortgage-backed securities, collateralized debt obligations and credit default swaps.
Deutsche Bank is cooperating fully in response to those subpoenas and requests for information, the company said.
Krause said the subpoenas were not related to any current issues.
We have done our internal review of our transactions. We do not feel that we have any similar situation to the one that is being discussed, he said.
The comments come ahead of a hearing later on Tuesday by the U.S. Senate's Permanent Subcommittee on Investigations into the role of investment banks in the financial crisis.
The hearing is shaping up as a trial of Goldman's business practices and comes as the U.S. bank battles a fraud suit by the SEC and the Senate weighs a massive bill to overhaul financial regulation.
Goldman Sachs and Chief Executive Lloyd Blankfein were hit with a shareholder lawsuit claiming they hid key details about a risky transaction that resulted in civil fraud charges and a plummet in its stock price.
Monday's lawsuit filed in a Manhattan federal court accused Goldman of making materially false and misleading statements about an Abacus collateralized debt obligation tied to subprime mortgages that regulators say it created and marketed although it was designed to lose money.