Deutsche Bank is one of the largest multinational banks, operating worldwide with 73,000+ employees in 73 countries. It headquarters is in Frankfurt, Germany, but banking, its largest division, is headquartered in London.
Deutsche Bank was founded in Germany in 1870 and by 1900 had branches in London, Shanghai and Yokohama. It underwrote the Northern Pacific Railroad in the US and the Baghdad Railway, and provided the capital for Krupp Steel and the Bayer Company.
Following Germany’s defeat, Allied authorities ordered Deutsche’s breakup into ten regional banks in 1948. These were later consolidated into 3 banks in 1952, which merged in 1957. After German reunification in 1990, takeover of the East German government bank completed the fold.
In 1995, Deutsche Bank began a transformation from a commercial bank to an investment bank and by 2005, 75% of its revenues came from investment banking. In that decade, its return on equity rose from 4% to 25%.
In 1999, Deutsche Bank acquired Banker’s Trust. The bank’s NY headquarters were soon destroyed in the 9/11 attack when debris from the Twin Towers hit the building. When their insurance carrier failed to pay Deutsche Bank sued. A major component of the Banker’s Trust deal was its 200 year-old U.S. investment bank, Alex Brown & Sons. Of note: In 1808, Alex Brown organized the first public offering in the US, that of the Baltimore Water Company.
Deutsche Alex Brown is a U.S. securities brokerage firm and is the client services division of Deutsche Bank Securities, the investment arm of the bank. This division provides a range of advisory, brokerage, research and investment services to individual and institutional investors in the US. It performs research on more than 2,500 stocks and provides advice on mergers and acquisitions, acquisition finance, and project finance.
Our law firm represents institutional and individual investors nationwide with significant losses in their portfolios, retirement plans or investment accounts. Our attorneys and staff have more than 100 years of combined experience in the securities industry and in securities law. Several of our lawyers served for years as Vice President or Compliance Officer of brokerage firms.
Each lawyer and staff member of our firm is devoted to assisting investors to recover losses caused by unsuitability, over-concentration, fraud, misrepresentation, self-dealing, unauthorized trades or other wrongful acts, whether intentional or negligent. We have handled over a thousand cases against hundreds of large and small investment firms, including claims against Deutsche Bank, Bankers Trust and/or Alex Brown.
Call us at (800)259-9010 or contact us through our Website to arrange a free confidential consultation with an attorney to discuss your experiences with an investment advisor or financial firm which resulted in losses.
Deutsche Bank Securities was fined $87.5 million by federal and state regulators for its role in an industry wide research scandal, including a penalty of $7.5 million for failing to timely produce e-mails in the investigation. An injunction was also issued to prevent the firm from engaging in those practices which constituted its violations.
The Securities and Exchange Commission, the North American Securities Administrators Association (NASAA), NASD, Inc., New York Stock Exchange (NYSE) and state securities regulators, including California’s Department of Corporations filed enforcement actions against Deutsche Bank Securities and a number of other Wall Street securities firms.
The subpoenas were issued by the regulators as part of an ongoing investigation into claims regarding fraudulent research. The $7.5 million additional penalty was for failing to promptly produce all e-mail, which delayed the investigation for over a year.
Deutsche Bank Securities was also required to dramatically reform its practices, including separating its research and investment banking departments at the firms, restructuring how research is reviewed and supervised, prohibiting analysts from being compensated for investment banking activities and making independent research available to investors.
Deutsche Bank’s CEO, Josef Ackermann, was indicted on for his involvement in a committee that approved alleged “payoffs” to executives of Mannesmann, a British telecom company. The payments, totaling $108 million dollars were made to Mannesmann’s former CEO and a number of other Mannesmann employees after the company was taken over by Vodafone. Ackermann and five others have been accused of breach of trust against shareholders.
After being fined $7.5 million for withholding e-mails, Deutsche Bank was fined again, this time $1.65 million, for failing to retain e-mail records.
The SEC, NYSE, and NASD announced the fine and required Deutsche Bank, and other the firms which were also fined, to review their document storage procedures.
Among the documents subpoenaed by regulators, but destroyed, were records detailing how Deutsche Bank voted regarding the Hewlett Packard/Compaq merge. Federal attention was raised after a lawsuit by its former founder against Hewlett Packard questioned the relationship of the company with Deutsche Bank. Although later dismissed, the suit alleged that HP “coerced”
Deutsche Bank (a holder of 25 million shares) into voting for an HP/Compaq merger by threatening to withhold its business from the firm should it vote against the move.
The NASD announced it ordered Deutsche Bank Securities, Inc. and other firms to each pay $5 million for rule violations relating to trading in corporate high yield bonds. Deutsche’s securities unit was cited for charging excessive markups or markdowns, inadequate record keeping and supervision violations. The firms were also ordered to revise their written supervisory procedures for high yield bond sales and purchases within 60 days.
Deutsche Bank Securities and others were also charged with trade-reporting violations. Deutsche Bank and one other firm were charged with failing to register one or more supervisors on the firms’ high yield desks.
“NASD rules require that firms sell all securities, including corporate high yield debt, at fair prices,” said the NASD’s Mary L. Schapiro. “NASD markup policy has been clear that markups and markdowns generally should not exceed5 percent and, for most debt transactions, that figure should be lower.
Numerous SEC and court rulings have reiterated these principles throughout the years. In the cases we announce today, markups and markdowns were clearly outside these well-established guidelines.”
The NASD found that Deutsche Bank charged markdowns ranging from 9.6 percent to 16.6 percent on seven pairs of trades. The firm bore little or no risk in these transactions.
The NASD censured, fined $225,000, and required Deutsche Bank Securities to revise its written supervisory procedures, for lapses in “short interest” reporting.
The findings also stated that the firm’s short positions were incorrectly classified and the firm failed to make corrections in a timely and effective manner. Positions were also reported to NASD inaccurately and incorrectly netted short positions against long positions.
In addition, NASD found that the firm’s supervisory system failed to provide for supervision reasonably designed to achieve compliance with applicable securities laws, regulations, and NASD rules concerning short interest reporting.
According to a report by German financial regulator BaFin, senior management at Deutsche Bank (DB) allegedly behaved “negligently” related to the rigging of Libor rates. The European regulator has been investigating the bank over its possible involvement in the manipulation of the inter-bank rate setting process.
BaFin contends that Deutsche Bank’s outgoing joint leader Anshu Jain may have lied to the European nation’s central bank, the Bundesbank, by purposely making inaccurate statements” about rate rigging during a 2012 interview. The regulator wants Deutsche Bank to be subject to special supervisory measures.
The Financial Times reports that, Jain, who resigned from his position and will officially step down at the end of the month, is accused of telling Bundesbank that he did not know about the rumors about possible rigging even though e-mails about a meeting on this matter were forwarded to him in 2008. Deutsche Bank, however, maintains that Jain did not lie or mislead the German central bank during the interview. The bank said that the BaFin report confirms its own findings that no current or ex-members of its Management Board or Group Executive Committee directed firm employees to rig intra-bank offered rate submissions or knew of any attempted manipulations before June 2011.
Deutsche Bank has paid over $9 billion in fines to resolve claims of Libor rigging. In April, the bank was fined $2.5 billion for manipulating interest-rate benchmarks.
BaFin’s report also brings up questions about whether one of Deutsche Bank’s New York-based traders tried to rig ISDAfix, which is a benchmark for yearly swap rates for swap transactions. The German regulator said that the trader manipulated the benchmark to enhance the value of an option at the expense of global investment management firm Pimco. An undocumented verbal warning was issued to the trader after the fund manager complained.
In other ISDAfix-rigging news, the Commodity Futures Trading Commission continues to investigate numerous banks. Several of these firms receive subpoenas from the regulator in 2013. To date, Barclays PC (BARC) is the only bank to agree to pay a fine to settle the allegations. However, according to Bloomberg, a source knowledgeable about the CFTC’s ISDAfix probe said that Barclays wasn’t the only bank to manipulate this benchmark.
The CFTC said that by trying to rig ISDAfix, Barclays stood to profit on derivatives trades with clients that wanted to hedge against interest rate movements. E-mails and recorded phone calls examined by the CFTC demonstrate that Barclays traders talked about their plans to manipulate ISDAfix to benefit their other derivatives trades.
The SSEK Partners Group
Our securities law firm represents investors that have sustained financial losses because of securities fraud or other negligence by members of the financial industry. We are dedicated to helping investors recoup their money. Over the years, we have helped thousands of clients. Contact The SSEK Partners Group today.
Deutsche Bank Says Co-CEO Jain Didn’t Mislead Central Bankers, Bloomberg, June 26, 2015
German regulator says Deutsche Bank CEO misled Bundesbank -FT, CNBC/Reuters, June 26, 2015