The latest compliance news in the North American wealth management sector.

Compliance woes continue at Deutsche Bank
Wall Street’s main watchdog yesterday ordered Deutsche Bank to repay clients more than $3.7 million after it found traders misled clients when executing mortgage-backed securities trades. 

The US Securities and Exchange Commission (SEC) found that traders at Germany’s largest lender “made false and misleading statements” when negotiating sales, which resulted in clients overpaying as Deutsche disguised the original purchase price. 

The bank failed to implement compliance and surveillance procedures that were “reasonably designed to prevent and detect the misconduct… that consequently increased the firm’s profits… to the detriment of its customers,” the SEC said in a statement.

Without admitting or denying the charges, Deutsche Bank has agreed to pay more than $3.7 million to customers, which includes $1.48 million that was ordered as disgorgement. The bank will also pay a $750,000 penalty.

Benjamin Solomon, former head trader at Deutsche Bank’s commercial mortgage-backed securities trading desk, was accused by the SEC of ignoring the false statements made to customers by traders under his supervision. He agreed to pay a $165,000 fine and is excluded from the securities industry for a year. 

“We’re committed to ensuring that firms communicate accurate pricing information when transacting with customers in opaque markets,” said Daniel Michael, chief of the SEC Enforcement Division’s Complex Financial Instruments Unit. “Deutsche Bank and Solomon failed to keep watch as traders generated profits for the firm at the expense of CMBS customers by misrepresenting purchase prices and other important details.”