The U.S. securities division of Deutsche Bank was hit with a $3 million penalty by the U.S. derivatives watchdog for a number of failures with its record keeping and segregated account systems.
The Commodity Futures Trading Commission (CFTC) found between June 2011 and March 2013, Deutsche Bank Securities did not automate processes for accurate financial reporting. Furthermore between the period October 1, 2009 and March 16, 2012, it failed to create and maintain systematic records such as order tickets for a number of block trades it executed.
In addition, the CFTC found the the unit had failed to accurately compute the amount of customer funds on deposit, and properly invest segregated funds between June and August in 2012.
As a result of these miscalculations, investment of customer funds in certain money market mutual funds during that period exceeded the 50% asset-backed concentration limit set by the CFTC.
The fine comes as the bank looks to strengthen its record keeping procedures after coming under fire from regulators this year of failing to invest and maintain reporting systems and controls.
In August, the U.K. Financial Conduct Authority (FCA) fined Deutsche Bank’s London branch around £4.7 million for incorrectly reporting over 29 million equity swaps transactions between November 2007 and April 2013.
“This case demonstrates that the Commission takes the sufficiency of its registrants’ internal controls very seriously, and expects that these internal controls will both address known issues and identify regulatory risks to minimize the possibility of violations like this,” says Aitan Goelman, director of the division of enforcement, CFTC.
Deutsche Bank plans to invest $1.2 billion and hire 500 staff to improve its compliance and record keeping division.
Deutsche Hit With $3 Million Fine For Failed Systems
The U.S. securities division of Deutsche Bank was hit with a $3 million penalty by the U.S. derivatives watchdog for a number of failures with its record keeping and segregated account systems.