Deutsche Bank Workers, Korea Broker Unit Indicted

Four Deutsche Bank AG (DBK) employees and its South Korean brokerage face a trial at a South Korean court after they were charged by prosecutors for causing a one-day rout in stocks in November that wiped off $27 billion in value.

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

“This shows prosecutors and regulators’ determination against unfair trading,” said Nam Gilnam, head of derivates at Korea Capital Market Institute, a Seoul-based researcher. “Foreign investors might take a more cautious approach to the South Korean market after seeing how this case goes. It’s a blow to Deutsche Bank’s operations as well as to its reputation.”

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 (KOSPI) to plunge in the last 10 minutes of trading on Nov. 11. 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.

http://www.bloomberg.com/news/2011-08-21/deutsche-bank-says-four-employees-securities-unit-indicted-in-south-korea.html