BROWSE BY TOPIC
- Bad Brokers
- Compliance Concepts
- Investor Protection
- Investments - Unsuitable
- Investments - Strategies
- Wall Street News
- Investments - Private
- Rules & Regulations
- Bad Advisors
- Boiler Rooms
- Terminations/Cost Cutting
- General News
- Donald Trump & Co.
- Big Banks
- Regulatory Sanctions
Stories of Interest
- Sarah ten Siethoff is New Associate Director of SEC Investment Management Rulemaking Office
- Catherine Keating Appointed CEO of BNY Mellon Wealth Management
- Credit Suisse to Pay $47Mn to Resolve DOJ Asia Probe
- SEC Chair Clayton Goes 'Hat in Hand' Before Congress on 2019 Budget Request
- SEC's Opening Remarks to the Elder Justice Coordinating Council
- Massachusetts Jury Convicts CA Attorney of Securities Fraud
- Deutsche Bank Says 3 Senior Investment Bankers to Leave Firm
- World’s Biggest Hedge Fund Reportedly ‘Bearish On Financial Assets’
- SEC Fines Constant Contact, Popular Email Marketer, for Overstating Subscriber Numbers
- SocGen Agrees to Pay $1.3 Billion to End Libya, Libor Probes
- Cryptocurrency Exchange Bitfinex Briefly Halts Trading After Cyber Attack
- SEC Names Valerie Szczepanik Senior Advisor for Digital Assets and Innovation
- SEC Modernizes Delivery of Fund Reports, Seeks Public Feedback on Improving Fund Disclosure
- NYSE Says SEC Plan to Limit Exchange Rebates Would Hurt Investors
- Deutsche Bank faces another challenge with Fed stress test
- Former JPMorgan Broker Files racial discrimination suit against company
- $3.3Mn Winning Bid for Lunch with Warren Buffett
- Julie Erhardt is SEC's New Acting Chief Risk Officer
- Chyhe Becker is SEC's New Acting Chief Economist, Acting Director of Economic and Risk Analysis Division
- Getting a Handle on Virtual Currencies - FINRA
We seek to provide information, insights and direction that may enable the Financial Community to effectively and efficiently operate in a regulatory risk-free environment by curating content from all over the web.
Stay Informed with the latest fanancialish news.
NEWSLETTERS & ALERTS
Deutsche Bank Sales Traders Cheated Customers on Mortgage-Backed Securities
by Howard Haykin
An opaque secondary market and inadequate supervision enabled greedy traders and sales people at Deutsche Bank Securities, Inc., to cheat customers on negotiated sales of commercial mortgage-backed securities.
On Tuesday, the SEC announced sanctions against Deutsche Bank Securities (“DBSI”) and Benjamin Solomon, its former global head of securitized products trading. DBSI will pay approximately $4.5 million in disgorgement, remediation, prejudgment interest and civil penalties to settle the SEC charges. Solomon, who was U5’d by DBSI in 2015, agreed to pay a $165,000 fine and serve a 12-month suspension.
In determining its sanctions, the SEC considered DBSI’s prompt remedial acts, significant cooperation, terminations of responsible personnel, and revision of procedures and controls – which included: (i) new compliance training; (ii) improved coordination between supervisory and compliance staff; (iii) a larger compliance staff; and, (iv) enhanced surveillance of communications and trade information.
SEC FINDINGS. Between 2011 and 2015, DBSI traders and salespeople made false and misleading statements while negotiating sales of commercial mortgage-backed securities (“CMBS”) in the secondary market. Customers overpaid for CMBS because they were misled about the prices at which Deutsche Bank had originally purchased them.
The purchase and sale of a CMBS bond often took place within minutes or hours and involved little or no risk to DBSI - essentially "riskless principal transactions."
DBSI 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. Solomon, who served as the head trader of DBSI’s CMBS trading desk, failed to take appropriate action after becoming aware of false statements made to customers by traders under his supervision - including specific misrepresentations about the prices that Deutsche Bank paid for the CMBS.
Because the CMBS secondary market is opaque and lacks easily accessible information on the prices at which CMBS trade, the broker-dealer arranging the sale of CMBS often provides information about the current market price of the bond.
[For further details on this case, click here: SEC Order.]