Deutsche Bank, Weisel Settle SEC Fraud Case
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Deutsche Bank AG and Thomas Weisel Partners LLC will pay a total of $100 million to settle allegations they published misleading stock research to win investment-banking business, becoming the last two firms to conclude a regulatory probe that changed Wall Street.
The settlements concluded an investigation that began more than three years ago when New York Attorney General Eliot Spitzer accused Merrill Lynch & Co. of publishing tainted research. Ten securities firms, including Merrill and Citigroup Inc. agreed in April 2003 to pay more than $1.4 billion in penalties and separate their research and investment banking business.
Deutsche Bank agreed to pay $1.65 million in December 2002 for its failure to adequately retain e-mail messages that regulators sought.
The firms neither admitted nor denied the allegations as part of the settlement with the SEC, the National Association of Securities Dealers, the New York Stock Exchange, and state regulators. The settlement cites them for failing to disclose payments for research and for issuing biased research.
Deutsche Bank agreed to an $87.5 million settlement that includes forfeiting $25 million and paying a $25 million penalty. Also included is $25 million to fund independent research, $5 million for investor education, and an additional $7.5 million fine for failing to promptly produce the e-mail.
Thomas Weisel’s $12.5 million settlement includes forfeiting $5 million, a $5 million fine, and $2.5 million to be used to fund independent research.
Both firms also agreed to separate their investment banking and research departments and prohibit analysts from receiving compensation for investment banking activities.