The Securities and Exchange Commission (SEC) in the US has fined Deutsche Bank $9.5 million for failing to safeguard non-public research and not providing electronic records to the regulator during its investigation.
An equity research analyst, Charles Grom, was encouraged by Deutsche Bank to communicate with its clients and trading teams, but disclosed ‘yet-to-be-published’ analyses and views, the SEC found.
Grom was fined $100,000 and suspended from the industry for a year by the SEC for certifying a rating via a research report, but telling others the rating would in fact be downgraded.
Antonia Chion, associate director of the SEC division of enforcement, explained the information generated by analysts like Grom “can move markets.”
“Broker-dealers must maintain and enforce policies and procedures that are reasonably designed in light of the nature of their business to prevent the misuse of such information,” she added.
The US watchdog also said Deutsche Bank failed to show records from its DB Chat communications system involving the equity research personnel during that period.
The bank has reportedly agreed to settle charges, although neither admitted or denied the allegations.