By Jed Horowitz
Dec 19 A U.S. regulator fined Deutsche Bank
Securities $1.25 million and censured it for overstating the
trades it made for clients in order to attract more business.
The U.S. broker-dealer of Deutsche Bank AG
exaggerated its trading volume by 4 percent, or more than 4
billion shares, between mid-October 2010 and mid-June 2012, the
Financial Industry Regulatory Authority said in a consent order
filing dated Dec. 14.
FINRA, an industry-funded regulator, found 98 incidents in
which Deutsche Bank's traders overstated their volume - by 9,900
percent, in the case of one unnamed security - in the four years
ended in June 2012.
FINRA has repeatedly warned broker-dealers about
misrepresenting their trading prowess in order to attract big
orders from mutual funds, hedge funds and other large investors.
The temptation to exaggerate customer trading orders grows in
periods of low volume, and the securities industry is completing
its fourth year of excessively low trading volume.
Under FINRA rules, brokerage firms are supposed to advertise
only actual orders and "indications of interest" that were
placed by customers or that they planned to fill from their own
inventory to help customers.
In 2007, several big brokerages admitted they had
exaggerated order volume on professional systems run by
Bloomberg LP, Thomson Reuters and other data providers. On Dec
18, 2007, Deutsche Bank agreed to pay $150,000 and to upgrade
its supervisory procedures to avoid violating FINRA rules.
The filing from FINRA's Office of Disciplinary Affairs said
the size of the new fine imposed on Deutsche Bank Securities was
"mitigated" because the bank cooperated in the investigation,
disciplined some traders, and reported other violations before
FINRA became aware of them.
"We are pleased to have resolved this matter," a Deutsche
Bank spokeswoman said.
Earlier this year, Jefferies Group also received a
censure and a fine of $550,000 from FINRA for exaggerating its
advertised trading volume after agreeing to a previous censure