Deutsche Boerse pays millions to end insider trading case
The insider trading investigation has cast a shadow over the German exchange operator's efforts to recover from the failed merger with LSE.
BERLIN/FRANKFURT - Deutsche Boerse has agreed to pay fines totalling US$12.5 million in a bid to draw a line under allegations of insider trading over share purchases by its chief executive, Carsten Kengeter.
But the exchange operator left a question mark hanging over its leadership, saying it would wait until investigations by Germany's finance watchdog and the government of Hesse are completed before deciding whether to extend Kengeter's contract.
Kengeter, who denies any wrongdoing and is cooperating with authorities, made share purchases shortly before formal merger talks with London Stock Exchange were announced and triggered a sharp rise in Deutsche Boerse's shares.
The insider trading investigation has cast a shadow over the German exchange operator's efforts to recover from the failed merger with LSE, drawn criticism from shareholders and made the board reluctant to extend the CEO's contract.
In July, the German exchange operator said that the Frankfurt prosecutor had offered a deal to settle the case for fines totalling 10.5 million euros.
Deutsche Boerse said it had now decided to accept the fines, but maintained that the allegations were unfounded.
“By doing so, Deutsche Boerse aims to ensure that the company can re-focus as quickly as possible on managing the business and leave behind the serious burdens placed on it by the investigation proceedings,” it said in a statement.
“Deutsche Boerse, however, does not share the Public Prosecutor's view concerning the accusations raised,” it said, adding it assumed the proceedings against Kengeter would be closed subject to conditions.
REPUTATIONAL RISK
Some shareholders were unhappy at the settlement.
“The damage to Deutsche Boerse's reputation is already immense. Shareholders should not be asked to shoulder more costs now.
This approach is not acceptable,” fund manager Ingo Speich of Union Investment, said.
The Frankfurt prosecutor declined to comment yesterday on the case against Kengeter, who last week said the stock purchases were a “moral duty”, or how long its investigation would take to conclude.
Meanwhile, German financial regulator BaFin said: “As previously announced, we will conduct an evaluation of whether Kengeter is still a 'fit and proper' manager once the criminal proceedings have been completed.” – Nampa/Reuters
But the exchange operator left a question mark hanging over its leadership, saying it would wait until investigations by Germany's finance watchdog and the government of Hesse are completed before deciding whether to extend Kengeter's contract.
Kengeter, who denies any wrongdoing and is cooperating with authorities, made share purchases shortly before formal merger talks with London Stock Exchange were announced and triggered a sharp rise in Deutsche Boerse's shares.
The insider trading investigation has cast a shadow over the German exchange operator's efforts to recover from the failed merger with LSE, drawn criticism from shareholders and made the board reluctant to extend the CEO's contract.
In July, the German exchange operator said that the Frankfurt prosecutor had offered a deal to settle the case for fines totalling 10.5 million euros.
Deutsche Boerse said it had now decided to accept the fines, but maintained that the allegations were unfounded.
“By doing so, Deutsche Boerse aims to ensure that the company can re-focus as quickly as possible on managing the business and leave behind the serious burdens placed on it by the investigation proceedings,” it said in a statement.
“Deutsche Boerse, however, does not share the Public Prosecutor's view concerning the accusations raised,” it said, adding it assumed the proceedings against Kengeter would be closed subject to conditions.
REPUTATIONAL RISK
Some shareholders were unhappy at the settlement.
“The damage to Deutsche Boerse's reputation is already immense. Shareholders should not be asked to shoulder more costs now.
This approach is not acceptable,” fund manager Ingo Speich of Union Investment, said.
The Frankfurt prosecutor declined to comment yesterday on the case against Kengeter, who last week said the stock purchases were a “moral duty”, or how long its investigation would take to conclude.
Meanwhile, German financial regulator BaFin said: “As previously announced, we will conduct an evaluation of whether Kengeter is still a 'fit and proper' manager once the criminal proceedings have been completed.” – Nampa/Reuters
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