Accusing Deutsche Bank employees of manipulating the stock market last year, regulators in South Korea have banned the bank from trading in certain securities and derivatives.
The Financial Services Commission initiated a probe against the bank after the KOSPI index fell by 2.8% on November 11, ten minutes before closure. The regulator has proposed prosecution for the staff while Deutsche Bank said it was ‘disappointed’.
The Korean regulator accused the bank of making illegal profits by manipulating the stock market.
The employees had completed trades worth $2.2 billion in the last ten minutes of trading on Korea’s main stock exchange the KOSPI index.
The employees had built up large positions in derivatives and made huge profits by selling them off suddenly. The sudden fall had wiped off $26 billion worth shareholders money in 10 minutes. The bank allegedly made profits worth 44.9 billion Won ($41 million).
The regulator said five employees from the bank’s Seoul, Hong Kong and New York were involved in the fiasco and now wants to prosecute them. However, it did not give out the names of the five employees.
Deutsche Bank termed the developments as regrettable, but assured it will cooperate with the authorities.
“Deutsche Bank will continue to cooperate with the Korean authorities in relation to the investigation of this matter”, it said in a statement.
“Deutsche Securities Korea (DSK) regrets sanctions imposed by the Financial Services Commission and the referrals of DSK and employees are very regrettable”, it added referring to its unit and employees being recommended for prosecution.