Germany's highest court is expected to rule Tuesday on whether Deutsche Bank AG misled hundreds of municipal clients and small companies about the risks of interest-rate swaps in a case that could lead to a cascade of judgments against the lender.

At the heart of the case is whether Deutsche Bank appropriately advised clients of the risks of the complex financial derivatives transactions—as well as the bank's potential profits as the seller of the swaps—as it marketed them as a way to save on interest-rate payments.

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