Deutsche Bank has agreed to pay a penalty of $9.5m (£7.8m, €8.6m) to the US Securities and Exchange Commission (SEC). This was revealed by the American regulator on Wednesday (12 October).
The SEC said it levied the penalty after it found the German lender had failed to safeguard material non-public information generated by its research analysts. The regulator further blamed the bank for publishing an improper research report and for failing to protect and provide certain electronic records that it had sought during the investigation.
The regulator said the German bank had about 50 equity research analysts who were encouraged to communicate with both its customers and its own sales and trading personnel. However, it explained there were a lack of adequate policies and measures to prevent them from disclosing yet-to-be-published views and analyses and other sensitive information such as changes in estimates and short-term trade recommendations.
Antonia Chion, associate director of the SEC Division of Enforcement said in a statement: "Information generated by research analysts such as ratings, views, estimates, and trading recommendations can move markets...Broker-dealers must maintain and enforce policies and procedures that are reasonably designed in light of the nature of their business to prevent the misuse of such information."
This penalty follows the $14bn fine the bank was asked to pay to the US Department of Justice (DoJ) last month. Those were related to the German bank's issuance and underwriting of residential mortgage-backed securities (RMBS) and related securitisation activities during the 2005-2007 period.
While Deutsche Bank has said it would negotiate this fine imposed by the DoJ, it has already agreed to pay the current one levied by the SEC without admitting or denying the regulator's findings.
In this regard, the German bank was cited by the Financial Times as saying: "We are pleased to have resolved this matter...The bank takes its research analyst communications and conduct very seriously and has had a robust policy and control framework. In response to the SEC's concerns, further enhancements were implemented."