The SEC announced today that Deutsche Bank Securities agreed to pay a $9.5 million penalty for failing to properly safeguard nonpublic information generated by its research analysts. Deutsche Bank also published an improper research report and failed to properly preserve and provide certain electronic records sought by the SEC during its investigation.
What Are The Violations?
Per the SEC order, Deutsche Bank encouraged its research analysts to communicate with customers without adequate procedures to prevent analysts from disclosing yet-to-be-published information such as views and analyses, changes in estimates and short-term trade recommendations.
The SEC order also found that Deutsche Bank issued a research report with a “Buy” rating for discount retailer Big Lots that was at odds with the personal view of the analyst who prepared and certified it as true, despite admitting to others that Big Lots should have been downgraded.
Cease and Desist
Deutsche Bank consented to the entry of the SEC order without admitting or denying the findings. In addition to the financial penalty, Deutsche Bank agreed to be censured and to cease and desist from committing or causing violations and any future violations of Sections 15(g) and 17(a) of the Securities Exchange Act of 1934 and Rule 17a-4 as well as Rule 501 of Regulation AC.
The SEC release can be found at the following link:
Jeff Petersen is an attorney licensed in California and Illinois representing clients in a host of securities matters. He can be reached in California at 858.792.3666 and in Illinois at 312.583.7488.