Deutsche Bank fined nearly $1m by Korea Exchange

City A.M. Reporter
Deutsche Bank's South Korean brokerage unit was fined nearly $1m (£618,000) by the country's exchange operator, the largest it has ever imposed, for failing to notify it on time about big derivative trades.

The fine marks the latest blow to the bank's reputation in Korea, at a time when the lender is counting on the Asia-Pacific region to deliver around €4bn in revenues by 2011 from around €2.1bn (£1.79bn) in 2008.

The Korea Exchange (KRX) decision follows a ruling by the country's financial regulator on Wednesday that the Deutsche unit manipulated the stock market through massive derivatives trades on November 11, triggering a market tumble.

The Financial Services Commission said Deutsche made $40.1m in improper profits by manipulating the stock market and suspended some of its operations for six months.

On Friday the Korea Exchange called for one Deutsche employee to resign or be suspended, and that two other employees at the firm be demoted or reprimanded.

"Deutsche failed in its duty to notify the Korea Exchange on time about its programme trades, hurting investor trust in our regulatory system and causing confusion (in the market)," said Lee Cheol-jae, an executive director of the exchange's Market Oversight Division.

"Deutsche Securities Korea deeply regrets the KRX action, however respects its decision to impose such penalties," the German bank said in a statement.

Michael West, head of communications for Deutsche Bank in Asia-Pacific, said the bank would not be "making any comments in relation to our employees."

"KRX will not take any actions on profits Deutsche made. Prosecutors may deal with it, however," said bourse spokesman Won Young-joon.

The FSC has decided to take five Deutsche employees to prosecutors for investigation.

Deutsche was one minute late in informing KRX about the large sell order coming from its accounts, according to the bourse.