Deutsche Bank, the largest bank in Germany, mistakenly paid $6 billion to a hedge fund client in a “fat finger” trade through its foreign exchange trade in June, according to a report from the Financial Times.
The report said Deutsche Bank recovered the money from the US- based hedge fund the following day. However, the incident raised questions regarding the operational controls and risk management of the German bank. It was an additional embarrassment to the German bank’s forex team in London, which is currently under regulatory investigations.
A junior member of the Deutsche Bank’s forex sales team processed the $6 billion trade while his superior was on holiday, according to people familiar with the situation. The junior trader processed a gross figure instead of processing a net value, explained one of the sources. He said the trade had “too many zeroes.”