13 Feb 2018
The United States’ Securities and Exchange Commission (SEC) has penalised Deutsche Bank and a trading desk executive after if found that traders and sales people made false and misleading statements while negotiating bond prices.
The bank also did not have compliance procedures in place designed to detect the misconduct that increased the firm’s profits on commercial mortgage-backed securities (CMBS) transactions, an investigation found.
Misled customers ended up overpaying for the securities, the SEC explained.
A senior official at the trading desk also did “did not take appropriate action after becoming aware of false statements made to customers by traders under his supervision.”
To settle the charges, Deutsche agreed to pay a $750,000 penalty and reimburse customers, distributing over $3.7 million to this effect. The trading executive also agreed to pay a $165,000 fine and to be suspended from the securities industry for 12 months.
Deutsche Bank said it “cooperated extensively with the SEC’s investigation and took appropriate disciplinary action, including termination in some instances.”
Daniel Michael, chief of the SEC Enforcement Division’s Complex Financial Instruments Unit, said: “We’re committed to ensuring that firms communicate accurate pricing information when transacting with customers in opaque markets.
“Deutsche Bank and [its senior trading official] failed to keep watch as traders generated profits for the firm at the expense of CMBS customers by misrepresenting purchase prices and other important details.”
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