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Freshfields claims victory for DB in defending $8bn claim as global institutions continue to fight fires

A week ago Deutsche Bank announced it was setting aside a €1.2bn provision to cover its legal costs but in better news today (8 November), the German banking giant and advisers Freshfields Bruckhaus Deringer claimed victory in fighting off an $8bn claim.

The claim was brought by Sebastian Holdings Inc. (SHI) – the Monaco-based investment firm wholly owned and controlled by Norwegian billionaire Alexander Vik – which alleged that Deutsche Bank put through unauthorised trades on its behalf.

Following a hard fought four month trial, judge Jeremy Cooke sitting in the High Court’s Queen’s Bench division today dismissed SHI’s entire claim, handing down an 800 page judgement and ordering SHI to pay the bank around $240m in compensation for unpaid margin calls from 2008.

Freshfields dispute resolution partners Andrew Hart, Tom Snelling and Christopher Robinson led the case alongside David Foxton QC at Essex Court Chambers.

Travers Smith advised Sebastian Holdings.

Snelling said: ‘We are exceptionally proud to have represented DB, one of the firm’s most important clients, in one of the most significant pieces of post-credit crunch litigation to hit the courts in 2013. It has been an extremely complicated case, with concurrent proceedings here and in New York following DB successfully resisting SHI’s attempt to move the proceedings from England.

‘A long series of case management conferences was necessary to ensure that the trial took place on time. The trial itself involved complex evidence from approximately 20 factual and 16 expert witnesses from the US, Switzerland, Asia and the UK, together with a gargantuan number of documents.’

However, in an insight into the daily fire fighting still undertaken by global financial institutions, Deutsche Bank and Barclays also today failed to prevent allegations of LIBOR rigging from being included in two on-going lawsuits, in a Court of Appeal decision seen as potentially opening the floodgates to further high value claims.

Last month Deutsche Bank reported a 98% fall in quarterly profits after setting aside additional funds to cover its liabilities, reflecting the mounting regulatory burden facing the financial institution. The bank’s group income before taxes dropped for the third quarter to €18m, against last year’s figure of €747m for the same period in 2012.

The bank’s litigation reserves now stand at €4.1bn, while general and administrative expenses increased by €872m due to higher litigation related expenses.