Deutsche Bank in Korea market fix


    23 February 2011
    Last updated at 20:53 ET

    Deutsche Bank employees manipulated South Korea’s stock market last year, financial regulators have said.

    As a result, it has been banned from trading certain securities and derivatives, and regulators have called for staff to be prosecuted.

    The Financial Services Commission started a probe after the KOSPI index fell 2.8% in the last 10 minutes of trade on 11 November.

    Deutsche Bank said it was “disappointed” with the findings.

    Massive Sell-off

    Deutsche Bank was investigated by regulators because they claim the company’s employees made illegal profits by manipulating the stock market.

    The regulators say Deutsche Bank employees pushed through $2.2bn (£1.4bn) worth of trades during the last 10 minutes of opening time on Korea’s main KOSPI stock index.

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    Deutsche Bank will continue to cooperate with the Korean authorities in relation to the investigation of this matter”

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    Deutsche Bank

    According to the regulators, the Deutsche Bank employees had built up large positions in derivatives that allowed them to impact the market when they were suddenly sold.

    It says the trading made the employees profits of about 44.9bn won ($41m).

    It also claims that the manipulation was done in collaboration with staff at Deutsche Bank’s Hong Kong operation.

    Regulators now want to prosecute five Deutsche Bank employees, who work in the company’s Hong Kong, New York and Seoul offices. They did not give the names of the employees.

    ‘Very regrettable’

    Deutsche Bank expressed regret over the penalties and the referral of its employees and South Korean unit to prosecutors.

    However, it said it would continue to cooperate with South Korean authorities.

    “Deutsche Bank will continue to cooperate with the Korean authorities in relation to the investigation of this matter,” it said in a statement.

    “Deutsche Securities Korea (DSK) regrets sanctions imposed by the Financial Services Commission and the referrals of DSK and employees are very regrettable,” it added.

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