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Deutsche Bank Fined $7.8 Million on Transaction Reporting

Financial Conduct Authority Enforcement Director, Tracey McDermott.The FCA has been cracking down to ensure firms provide accurate and full reporting on transactions. Photographer: Richard Gleed/Financial Conduct Authority
Financial Conduct Authority Enforcement Director, Tracey McDermott.The FCA has been cracking down to ensure firms provide accurate and full reporting on transactions. Photographer: Richard Gleed/Financial Conduct Authority

Aug. 28 (Bloomberg) -- Deutsche Bank AG, Europe’s biggest investment bank, was fined 4.7 million pounds ($7.8 million) by the British markets regulator for failing to properly report millions of transactions.

A coding error reversed a buy/sell indicator, leading Deutsche Bank to improperly report on 29.4 million equity swap contracts for difference transactions between November 2007 and April 2013, the Financial Conduct Authority said in a statement today.

Deutsche Bank “is a major market participant responsible for reporting millions of transactions every year,” FCA Enforcement Director Tracey McDermott said in the statement. “There is simply no excuse for Deutsche’s failure to get this right.”

The FCA has been cracking down to ensure firms provide accurate and full reporting on transactions. The London-based regulator has fined 10 other firms for similar failures, including Barclays Plc, Credit Suisse Group AG, Commerzbank AG and Royal Bank of Scotland Group Plc, according to its statement.

Deutsche Bank “immediately undertook a complete review of our transaction reporting systems to rectify the problem and strengthen our control framework” after the issue was identified in March 2013, Kathryn Hanes, a London-based Deutsche Bank spokeswoman, said in an e-mail today.

Compliance Hires

The bank is spending 1 billion euros ($1.3 billion) to improve its controls and reporting systems and is dedicating 1,300 people to that effort, including the hiring of about 500 people in the U.S. this year, Chief Financial Officer Stefan Krause said last month.

Deutsche Bank’s fine is the second-highest following the 5.6 million-pound penalty against Edinburgh-based RBS in July 2013, the FCA’s website shows. The regulator said that Deutsche Bank’s penalty was reduced from 6.7 million pounds because it agreed to settle at an early stage of the investigation.

Deutsche Bank, based in Frankfurt, is contending with several other regulatory investigations in Europe and the U.S., including allegations that traders colluded to manipulate benchmarks for interest rates and currencies. The bank has said it is cooperating with the probes.

Deutsche Bank’s litigation reserves stood at 2.2 billion euros at the end of June, according to company filings.

To contact the reporters on this story: Nicholas Comfort in Frankfurt at ncomfort1@bloomberg.net; Gavin Finch in London at gfinch@bloomberg.net

To contact the editors responsible for this story: Heather Smith at hsmith26@bloomberg.net; Elisa Martinuzzi at emartinuzzi@bloomberg.net Joshua Gallu

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