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December 16, 2016 at 05:28 AM
New York Attorney General Eric T. Schneiderman announced that Deutsche Bank Securities will pay a combined $37 million to the state of New York and the Securities and Exchange Commission to settle investigations into false statements and omissions made in connection with the marketing of Deutsche Bank’s electronic equities order routing services, known as its “Dark Pool Ranking Model.”
As part of the agreement, Deutsche Bank admits that it misled investors and violated New York State and federal securities laws. The Attorney General’s Office and the SEC have also censured Deutsche Bank for its conduct.
“Misleading and self-serving statements that defraud investors will not be tolerated. Electronic order routing systems that route investor orders to various markets, including dark pools, are a part of modern equities trading, and companies that promote their routing capabilities must do so truthfully,” Schneiderman said in a statement.
The attorney general’s investigation found – and Deutsche Bank admits – that for two years, from January 2012 through February 2014, Deutsche Bank’s Dark Pool Ranking Model, which Deutsche Bank touted as the “core” of its order router, was not functioning as Deutsche Bank represented.
In fact, according to Schneiderman, when Deutsche Bank discovered in 2013 that a technological problem was causing a significant malfunction in the model, Deutsche Bank did not fully correct the problem or tell clients about it.
The bank did, however, ensure that its own dark pool was not affected by the problem and would remain eligible to receive all client orders.
The attorney general’s investigation found, and Deutsche Bank has admitted, that Deutsche Bank’s marketing of its DPRM was materially misleading.
SEC Files Charges in $26 Million Stock Manipulation Scheme
The Securities and Exchange Commission today charged two New Jersey-based traders with manipulating more than 2,000 stocks traded on the New York Stock Exchange and Nasdaq and reaping more than $26 million in profits from their successful trades.
The SEC alleges that Joseph Taub and Elazar Shmalo utilized dozens of accounts at various brokerage firms to carry out their scheme undetected, typically using two at a time to engage in a flurry of manipulative trading activity that usually lasted less than five minutes.
