FINRA Fines Deutsche Bank $12.5M

The Financial Industry Regulatory Authority (FINRA) has fined financial giant Deutsche Bank Securities $12.5 million on Monday (Aug. 8), Reuters reported. The fine came in tandem with findings that the firm had not monitored employees that had access to information disseminated over so-called “squawk box” calls, where sensitive information slated to go only to research and trading desks was overheard by private wealth employees.

Those private wealth employees included financial advisers and brokers. The regulatory body did not state that any of the information that fell into the auditory purview of those employees was misappropriated or misused. But as Reuters noted, the information could have, and typically does, include information that can be sensitive, including large blocks of trades by clients, which introduce volatility into individual stocks. FINRA did, however, state that the bank did not act on warnings that had been issued by its own internal compliance department, with direct citation of inadequate control over squawk box procedures.

Though Deutsche did not admit or deny any wrongdoing in connection with the case and the settlement, the bank did agree to strengthen internal procedures related to such squawk box internal controls.

The $12.5 million fine is the largest to date in a squawk box case. The next largest one has stemmed from a $7 million fine levied in 2009 against Merrill Lynch, and in that case, information was indeed misused by traders and brokers at the firm.