Deutsche Bank Settles Over Prime-Brokerage 'Deficiencies'

Dec 20 2013 | 11:33am ET

Deutsche Bank has settled allegations of "serious" problems at its prime-brokerage business for $6.5 million.

The Financial Industry Regulatory Authority said that "serious and operational deficiencies" were discovered four years ago in a hedge-fund lending program operated through Deutsche Bank's London affiliate. The problems resulted in "overstated capitalization and inadequate customer reserves."

Deutsche Bank did not admit or deny wrongdoing, and said it was "pleased to put these matters behind us."

FINRA said a "lack of transparency" left the bank unable to monitor its enhanced lending accounts, and that while its books showed US$9.4 billion owed to the affiliate, neither Deutsche Bank nor FINRA could "readily determine" how much of that total was from the lending program, and how much from proprietary trading.


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