- Employee gets five-year jail term for causing 2010 Market Rout
- Bank is fined for role in erasing $23 billion in share values
Deutsche Bank AG’s South Korean brokerage unit and one of its employees were convicted of manipulating share prices in November 2010, triggering a one-day rout that wiped out 28 trillion won ($23 billion) in value from the nation’s equity market.
The 43-year-old banker was sentenced to a five-year jail term and his employer, Deutsche Securities Korea, fined 1.5 billion won, according to a ruling released Monday by Seoul Central District Court Judge Shim Gyu Hong. The employee wasn’t identified in court.
Deutsche Bank, based in Frankfurt, earned 44.8 billion won from the trades, according to the verdict. The profits will be collected by the prosecution, according to the ruling.
“Deutsche Bank respectfully acknowledges the court’s decision regarding its Korean subsidiary,” Michael West, a Hong Kong-based spokesman for the parent company, said in an e-mailed statement. “Deutsche Bank has strengthened its systems and controls and is committed to compliance with applicable laws and regulation in all jurisdictions and to making a positive contribution to the development of Korean financial markets.”
The one-day selloff occurred Nov. 11, 2010, in the last 10 minutes of trading when the Kospi 200 Index dropped 2.8 percent, as a result of derivatives positions set by the bank’s Korean employee and three Hong Kong-based Deutsche Bank colleagues, according to government data. The three traders in Hong Kong sold 2.44 trillion won worth of shares, according to the court.
The whereabouts of the Hong Kong-based traders -- who are citizens of the U.K., France and Australia and have left the bank -- are unknown, according to a South Korean government official who asked not to be identified because the case is pending. Arrest warrants have been issued and the government is cooperating with authorities in Hong Kong and their home countries to locate them, the official said.
DBK GR Deutsche Bank AG