Deutsche Bank Conflict of Interest Settlement

Deutsche Bank Securities Inc. has settled with the California Department of Corporations for $87.5 million. The department will receive $3 million of the settlement, while $25 million will be paid as a penalty for the conflict of interest charges, $25 million for the funding of research conducted by independent organizations, $7.5 million for the delay of the state investigation and withholding of evidence, $5 million in promotion of investor education, as well as an additional $25 million. Another firm, Thomas Weisel Partners LLC, also have to pay $12.5 million, with $5 million going to both disgorgement and a penalty for conflict of interest, and the rest towards independent research groups. The two settlements stem from an investigation into the practices of several investment banking companies by federal investigators. They allege that the companies in question were in violation of several federal codes and regulations, mostly in regards to influencing research analysts. As well as the financial penalties, the two companies also have to comply with new regulations about how they are run. Some of the new policies include a division between research and investment branches and the allowance investors to be able to review independent research. Half of all the monetary penalties will be set aside for customers of the companies. [EAST BAY BUSINESS JOURNAL]

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