Deutsche Bank AG was fined $12.5 million by an industry-backed U.S. regulator for failing to prevent the dissemination of non-public information over an internal speaker system.
Deutsche Bank Securities Inc. broadcasted confidential information through an internal speaker system known as “squawk boxes” without supervising certain employees’ access, according to a statement Monday from the Financial Industry Regulatory Authority. The Frankfurt-based bank repeatedly ignored red flags for years that its monitoring system was inadequate, Finra said.
“Deutsche Bank’s disregard of years of red flags including internal audit findings, risk assessments and compliance recommendations was particularly egregious given the risk that material nonpublic information could be communicated over squawk boxes,” said Brad Bennett, Finra’s head of enforcement.
At least one firm employee communicated “potentially confidential” or “material non-public information” to customers, as a result of Deutsche Bank’s supervisory deficiencies, Finra said in its complaint. The bank’s failure to establish, maintain or enforce adequate oversight procedures dates back to January 2008, the regulator said.
Without admitting or denying Finra’s findings, Deutsche Bank has agreed to implement a monitoring system that complies with Finra rules concerning the dissemination of trading-related information. In June, the bank agreed to pay $6 million fine to settle Finra allegations over inadequate submissions of blue-sheet trading data.
Deutsche Bank spokeswoman Amanda Williams declined to comment.