The securities division of a major European bank was nailed for the third time in less than three weeks by an American regulator in another alleged securities fraud scheme.
The Securities and Exchange Commission (SEC) announced an enforcement action against the commercial mortgage backed securities division of Deutsche Bank for misleading their clients.
“The Securities and Exchange Commission today instituted an enforcement action against Deutsche Bank Securities Inc., which has agreed to repay more than $3.7 million to customers, which includes $1.48 million that was ordered as disgorgement.
“The SEC’s investigation found that traders and salespeople made false and misleading statements while negotiating sales of commercial mortgage-backed securities (CMBS). According to the SEC’s order, customers overpaid for CMBS because they were misled about the prices at which Deutsche Bank had originally purchased them. According to the SEC’s order, Deutsche Bank failed to have compliance and surveillance procedures in place that were reasonably designed to prevent and detect the misconduct that consequently increased the firm’s profits on CMBS transactions to the detriment of its customers.”
This is the third time an American regulator has announced an action against Deutsche Bank for securities related fraud in less than a month.
Last week, the Commodities Futures Trading Commission nailed the same securities division of Deutsche Bank in a SWAP manipulation scheme.
“The Commodity Futures Trading Commission (CFTC) today issued an Order filing and settling charges against Deutsche Bank Securities Inc. (DBSI) for attempted manipulation of the ISDAFIX benchmark and requiring DBSI to pay a $70 million civil monetary penalty.
“The CFTC Order finds that over a five-year period, beginning in at least January 2007 and continuing through May 2012 (the Relevant Period), DBSI made false reports and through the acts of multiple traders attempted to manipulate the U.S. Dollar International Swaps and Derivatives Association Fix (USD ISDAFIX), a leading global benchmark referenced in a range of interest rate products, to benefit its derivatives positions, including positions involving cash-settled options on interest rate swaps.”
In late January, the securities division of Deutsche Bank was implicated as one of three banks and six traders in a global spoofing scheme; that announcement was coordinated between the CFTC and the US Department of Justice.
“The Commodity Futures Trading Commission (CFTC) today issued an Order filing and settling charges against Deutsche Bank AG (DB AG) and Deutsche Bank Securities Inc. (DBSI) (collectively, DB), requiring DB to pay a $30 million civil monetary penalty and to undertake remedial relief.” The CFTC stated. “The Order finds that from at least February 2008 and continuing through at least September 2014, DB AG, by and through certain precious metals traders (Traders), engaged in a scheme to manipulate the price of precious metals futures contracts by utilizing a variety of manual spoofing techniques with respect to precious metals futures contracts traded on the Commodity Exchange, Inc. (COMEX), and by trading in a manner to trigger customer stop-loss orders.”
Deutsche Bank provided this statement: “The bank cooperated extensively with the SEC’s investigation and took appropriate disciplinary action, including termination in some instances.”
The most recent three incidents continue a pattern of securities related malfeasance at Deutsche Bank stretching a decade and more.
The bank was a player in the LIBOR manipulation scandal and the bank was fined $190 million for currency rigging.