ML-Implode News - Barclays, Deutsche Bank Face U.S. Senate Hearing On Leverage

Barclays Plc (BARC) and Deutsche Bank AG (DBK) face scrutiny over their sale of products to a hedge-fund firm that allowed it to skirt borrowing limits and avoid taxes, according to people with knowledge of the matter... The investigation is another blow for Antony Jenkins, chief executive officer of London-based Barclays, as he seeks to restore the firm's reputation after it became the first lender to be fined for rigging Libor. For Deutsche Bank, the hearing comes less than four years after the Frankfurt-based lender paid $554 million to avoid unrelated U.S. criminal charges involving the sale of tax shelters.
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Next week's hearing will focus on a series of transactions known as barrier options between the banks and Renaissance, the East Setauket, New York-based hedge-fund manager founded by billionaire James H. Simons, the people said. The tax benefits allegedly generated by the options are the subject of a dispute between Renaissance and the Internal Revenue Service, the people said. Bloomberg News reported on the transactions last year.

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Barclays, Deutsche Bank Face U.S. Senate Hearing On Leverage