Last week, the Securities and Exchange Commission (SEC), brought an enforcement action against Deutsche Bank Securities Inc., forcing the bank to repay more than $3.7 million to customers, including $1.48 million that was ordered as disgorgement. Allegedly, traders and sellers at Deutsche Bank made false and misleading statements while negotiating the sales of commercial mortgage-backed securities (CMBS). According to the SEC, customers overpaid for these because they were misled about the prices at which the bank had originally purchased them.
The Order states that 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. Former head trader at Deutsche’s CMBS trading desk, Benjamin Solomon, allegedly did not take appropriate action after becoming aware of false statements made to customers by traders under his supervision, including specific misrepresentations about the prices paid for the CMBS. The bank agreed to a $740,000 penalty and to the distribution of more than $3.7 million because of its misconduct. Solomon agreed to pay a $165,000 penalty and serve a 12-month suspension from the securities industry. Please call us today if you suffered losses with Deutsche Bank.
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