(Adds details about SEC's case against the bank)
By Sarah N. Lynch
WASHINGTON Oct 12 Deutsche Bank will pay a $9.5
million penalty to settle civil charges that it failed to
properly safeguard material non-public information generated by
its research analysts and of publishing an improper research
report, U.S. regulators said Wednesday.
The Securities and Exchange Commission said Deutsche Bank's
securities unit encouraged its equity research
analysts to communicate with customers and its own traders, and
failed to implement policies to prevent the analysts from
disclosing non-public reports on trading recommendations and
changes in estimates.
The bank settled the case without admitting or denying the
charges. In a statement, Deutsche spokeswoman Amanda Williams
said the bank "takes its research analyst communications and
conduct very seriously."
She added that the bank has a robust policy in place and has
taken steps to correct issues identified by the SEC.
The SEC also charged the bank for issuing a research report
about retailer Big Lots urging investors to buy stock,
even though the former analyst who had prepared it privately
told certain bank employees the stock should have been
The former analyst, Charles Grom, was charged by the SEC in
February. Without admitting or denying the charges, he agreed to
pay a $100,000 fine and be suspended from the industry for a
The bank had fired Grom in February 2013 "for conduct not
consistent with firm standards," according to the SEC's prior
order in the matter.
The SEC also charged the bank on Wednesday for failing to
provide certain electronic records to the regulator during the
course of the probe.
The SEC said it had sought messages on the bank's internal
communications system, but the bank "could not represent that it
had recovered" all of the messages because it did not preserve
The SEC's case against Deutsche Bank harkens back to issues
raised more than a decade ago after the agency and the former
New York Attorney General struck a global settlement with 10
banks accused of various conflicts of interest in their research
departments. Deutsche was not one of those banks.
The 10 banks settled various SEC charges that included
issuing fraudulent research reports, receiving payments for
research, and issuing reports that were not based on "fair
dealing and good faith."
The global settlement required those 10 banks to implement
reforms, including separating their research and investment
(Reporting by Sarah N. Lynch and Mohammad Zargham in
Washington; editing by Richard Chang)