Deutsche Bank Korea indicted for market manipulation 10 minutes before market close..

Discussion in 'Wall St. News' started by ASusilovic, Aug 21, 2011.

  1. Four Deutsche Bank AG (DBK) employees and its South Korean brokerage were indicted for causing a rout in stocks, the lender’s latest setback in the Asian nation after a six-month trading ban over the incident.

    The Seoul Central Prosecutors’ Office decided to charge the German bank’s staff and Deutsche Securities Korea Co. on Aug. 19, the lender said in an e-mailed statement today. Repeated calls to the South Korean prosecutor’s office outside business hours weren’t answered.

    The Financial Services Commission said in February that five of the Frankfurt-based lender’s employees conspired to manipulate the market, causing the Kospi index to plunge in the last 10 minutes of trading on Nov. 11, erasing $27 billion of market value. Deutsche Bank was banned from trading shares and derivatives for its own account for six months from April 1, the heaviest penalty imposed on any securities company in Korea.

    “It’s regrettable that the Seoul Central District Prosecutors’ Office has decided to charge its local Korean brokerage unit, Deutsche Securities Korea (DSK),” according to the statement. “DSK denies the charges, which will be defended. DSK did not authorize or condone any breach of market regulation.”

    Deutsche Bank, which didn’t elaborate on the charges, said its business operations in Korea aren’t affected.
    Derivative Contracts

    Yonhap News reported the indictment earlier today.

    South Korean prosecutors began their investigation into the bank’s operations at the request of the regulators in February.

    The German lender on June 13 appealed a court order freezing some of its assets, Gong Do Il, a spokesman for the Seoul Central District Court, said on July 14. The bank said June 9 that a preservation order on some assets was granted by a court at the request of prosecutors and without Deutsche Bank’s arguments being heard.

    The Kospi Index (KOSPI) dropped 2.7 percent on Nov. 11, prompting the regulators to limit the number of equity derivative contracts investors can hold. Scrutiny of equity-market swings has heightened globally since a 20-minute drop in U.S. equities on May 2010 briefly erased $862 billion of market value.
    Trading Profit

    Five Deutsche Bank employees in Hong Kong, New York and South Korea conspired to sell 2.44 trillion won worth of shares on the spot market for half an hour until 10 minutes before the 3 p.m. market close on Nov. 11, when options contracts expired, regulators said on Feb. 23. The actions were intended to drive down the Kospi index and gave Deutsche Bank 45 billion won ($41 million) of “unfair trading” profit, the Financial Services Commission and Financial Supervisory Service said.

    10 minutes before the close on option expiration day. Yep, market manipulation de luxe.... :cool: