Deutsche Bank

Deutsche Bank was founded in Berlin in 1870, and is presently the largest bank operating under the euro. The firm does business worldwide and employs over 75,000 people. A number of regulatory actions have been taken against it since April of 2002. In Germany Deutsche Bank's CEO has faced breach of trust charges. In the U.S., the firm has agreed to a proposed $80 million "investment reform" settlement with federal regulators for failing to abide by document retention standards.

Breach of Trust Charges - Germany

Deutsche Bank's CEO, Josef Ackermann, was indicted on February 25, 2003, for his involvement in a committee that approved alleged "payoffs" to executives of Mannesmann, a British telecom company. The payments (totaling $108 million dollars) were made to Mannesmann's former CEO (Klaus Esser) and a number of other Mannesmann employees after the company was taken over by Vodafone. Investigations regarding the payments began in March of 2001. Ackermann and five others have been accused of breach of trust against shareholders.

Investment Reform Settlement - U.S.

On December 20, 2002, Deutsche Bank was one of ten investment banks that agreed to pay large securities fraud settlements to end probes by U.S. Federal regulators. Deutsche Bank's agreed $80 million settlement may be adjusted in light of recent evidence that was uncovered by the firm's U.S. branch. Deutsche Bank brought forward a collection of emails that had been left out of documents subpoenaed by U.S. regulators. The emails, which were found in April of 2003, and dated during the questioned mid-1999 to mid-2001 period, were brought before U.S. regulators immediately after being found. The terms of the settlement, finalized on April 28, 2003 and temporarily excluding Deutsche Bank due to the emails in question, required the firms to "sever the links between research and investment banking," place restrictions on "allocations of securities in hot IPOs... to certain company executive officers and directors," and "furnish independent research."

Record Retention Fine - U.S.

On December 2, 2002, Deutsche Bank was fined $1.65 million by U.S. regulators for its failure to abide by email retention standards. The fine (separate from the aforementioned settlement) also affected Goldman Sachs, Morgan Stanley, Smith Barney, and U.S. Bancorp Piper Jaffray. The SEC, NYSE, and NASD announced the fine and required, conjointly, that the firms review their document storage procedures.

Documents Subpoenaed - U.S.

Among the documents subpoenaed by regulators prior to the December 20, 2002 settlement were records detailing how Deutsche Bank had voted regarding the Hewlett Packard/Compaq merge. Federal attention was raised in regards to the documents after a lawsuit brought against Hewlett Packard questioned the relationship the company had with Deutsche Bank. The lawsuit, which was filed by former HP director Walter Hewett, was dismissed on account of inadequate evidence. It alleged, however, that HP "coerced" Deutsche Bank (a holder of 25 million shares) into voting for an HP/Compaq merge by threatening to withhold its business from the firm should it vote against the move. The SEC and federal regulators requested the voting records (from HP) on April 15, 2002 in order to assess if Deutsche Bank had indeed voted in favor of the merge because of threats from HP. Such a vote, made in response to corporate pressure, could be seen as a breach of fiduciary duty.

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