Ex-Deutsche Bank trader and US Govt clash over investigation interview

James Vorley, a former Deutsche Bank precious metals trader accused of spoofing, has locked horns with the United States Government over statements he made during his last interview with the bank back in 2015. Documents filed with the Illinois Northern District Court and seen by FinanceFeeds shed light on the conflict between the parties in this criminal case.

Vorley makes two main claims regarding the disciplinary investigation interview that took place on March 17, 2015:

• 1) that his statements were coerced under the threat he would not receive compensation;
• 2) that the interview was a part of the bank’s co-operation with the Government.

Vorley alleges that his former employer, Deutsche Bank, required him to attend a disciplinary investigation interview and recorded his statements on March 17, 2015, under the threat of forfeiture of over GBP 400,000 in deferred compensation, as part of the bank’s cooperation with the government’s investigation.

Vorley argues that, in response, the government presents no evidence to support its contention that the bank acted independently, refuses to disclose its communications with the bank in the period leading up to the interview, and contends that the statements were voluntary. Contrary to the government’s arguments, Vorley says that the evidence in support of his allegations easily establishes a case for suppressing the statements in accordance with the Fifth Amendment’s prohibition against the use of compelled statements in a criminal case.

In support of his allegations, Vorley presented documentary evidence that the bank conducted an internal investigation of its precious metals desk in 2013 and 2014, including a review of potential spoofing. Vorley was interviewed no fewer than six times during the course of this investigation. In at least one of those interviews, in May 2014, he was questioned about the reference to “spoofing it up” in an electronic chat. Vorley was also referred to an internal disciplinary panel during the course of the bank’s internal investigation. The panel cleared Mr. Vorley of the alleged misconduct, including the allegations that he “bluffed” or “spoofed” the precious metals markets.

Months later, Vorley received notice that, as part of a strategic restructuring in which the bank had decided to exit the precious metals business, he would be terminated for reasons of redundancy as of March 11, 2015. In February 2015, notwithstanding the fact that he had already been scheduled for termination and offered a severance package, Vorley was reinterviewed twice by the bank’s outside counsel.

Then, on March 9, 2015, just two days before his last day of work, he received a letter stating that he was “required” to attend a disciplinary investigation interview. The letter “strongly encouraged” Vorley to answer questions, while threatening that an adverse finding by the disciplinary panel could result in forfeiture of his “deferred compensation.”

The government argues that “common sense tells us that the government did not direct the bank to undertake the interview.” But the government offers no evidence to back up its assertions and refuses to disclose its communications with the bank that would shed light on the government’s role in the interview.

Vorley stresses that Deutsche Bank showed no interest whatsoever in disciplining him for months after it questioned him in May 2014 about the “spoofing it up” chat. It then terminated him as redundant and offered him a severance package. However, once it began cooperating with the government’s precious metals investigation, including with respect to interviews of employees, it referred Vorley for a disciplinary investigation interview. In the interview, which was coordinated with the bank’s outside counsel, the bank created an audio recording that could be used as evidence – something it had not done in the prior eight interviews and the earlier disciplinary process involving Vorley.

Vorley argues that the government should be required to produce (1) evidence to support its claim that the interview was the product of an “employment dispute” between Deutsche Bank and Mr. Vorley and not the bank’s effort to gather evidence on behalf of the government; and (2) evidence of its communications with Deutsche Bank during the course of the investigation, including the CFTC’s communications with the bank.

According to the trader, there is no evidence that the bank had any reason for reopening its investigation of him in the final days of his employment other than its desire to earn cooperation credit from the government. The most reasonable conclusion to be drawn in these circumstances is that the March 17, 2015 disciplinary investigation interview was conducted as part of the bank’s cooperation, Vorley says.

Vorley says that the threat of a severe economic sanction for refusal to participate in this interview could not have been clearer to him. At the time, he was owed over GBP 400,000 in “deferred compensation.” He was on the verge of unemployment and expecting the birth of his first child. And a large payment he was supposed to receive from the bank in February 2015 had not arrived. Under these circumstances, Vorley reasonably “believed at the time that [he] had no choice but to attend the interview and answer questions about the allegations in the letter.”

Vorley argues that his statements at the subsequent disciplinary investigation interview cannot be considered the product of a “free choice to admit, to deny, or to refuse to answer.”

Hence, according to him, his statements made during that last interview with the bank should be suppressed from the criminal proceedings against him.

In the alternative, the former trader asks for an evidentiary hearing to be held. He argues that a hearing will allow the Court to determine the two key disputed material facts: (1) whether the March 17, 2015 disciplinary investigation interview was conducted as part of Deutsche Bank’s cooperation with the government’s investigation such that its conduct is fairly attributable to the government; and (2) whether Vorley’s statements were in fact coerced under the threat of a severe economic consequence – i.e., forfeiture of his substantial deferred compensation.