Deutsche Bank - Alex Brown Background Information

Deutsche Bank is one of the largest multinational banks, operating worldwide with 73,000+ employees in 73 countries.  It headquarters is in Frankfurt, Germany, but banking, its largest division, is headquartered in London

Deutsche Bank was founded in Germany in 1870 and by 1900 had branches in London, Shanghai and Yokohama. It underwrote the Northern Pacific Railroad in the US and the Baghdad Railway, and provided the capital for Krupp Steel and the Bayer Company.

Following Germany's defeat, Allied authorities ordered Deutsche's breakup into ten regional banks in 1948.  These were later consolidated into 3 banks in 1952, which merged in 1957.  After German reunification in 1990, takeover of the East German government bank completed the fold.

In 1995, Deutsche Bank began a transformation from a commercial bank to an investment bank and by 2005, 75% of its revenues came from investment banking.  In that decade, its return on equity rose from 4% to 25%.

In 1999, Deutsche Bank acquired Banker’s Trust.  The bank's NY headquarters were soon destroyed in the 9/11 attack when debris from the Twin Towers hit the building. When their insurance carrier failed to pay Deutsche Bank sued.  A major component of the Banker’s Trust deal was its 200 year-old U.S. investment bank, Alex Brown & Sons. Of note: In 1808, Alex Brown organized the first public offering in the US, that of the Baltimore Water Company.

Deutsche Alex Brown is a U.S. securities brokerage firm and is the client services division of Deutsche Bank Securities, the investment arm of the bank. This division provides a range of advisory, brokerage, research and investment services to individual and institutional investors in the US.  It performs research on more than 2,500 stocks and provides advice on mergers and acquisitions, acquisition finance, and project finance.

Shepherd Smith Edwards & Kantas LTD LLP Law

Our law firm represents institutional and individual investors nationwide with significant losses in their portfolios, retirement plans or investment accounts.  Our attorneys and staff have more than 100 years of combined experience in the securities industry and in securities law. Several of our lawyers served for years as Vice President or Compliance Officer of brokerage firms.

Each lawyer and staff member of our firm is devoted to assisting investors to recover losses caused by unsuitability, over-concentration, fraud, misrepresentation, self-dealing, unauthorized trades or other wrongful acts, whether intentional or negligent.  We have handled over a thousand cases against hundreds of large and small investment firms, including claims against Deutsche Bank, Bankers Trust and/or Alex Brown.

Call us at (800)259-9010 or contact us through our Website to arrange a free confidential consultation with an attorney to discuss your experiences with an investment advisor or financial firm which resulted in losses.

Additional Information:

Deutsche Bank Fined $87 Mil. In Research Scandal

Deutsche Bank Securities was fined $87.5 million by federal and state regulators for its role in an industry wide research scandal, including a penalty of $7.5 million for failing to timely produce e-mails in the investigation.  An injunction was also issued to prevent the firm from engaging in those practices which constituted its violations.

The Securities and Exchange Commission, the North American Securities Administrators Association (NASAA), NASD, Inc., New York Stock Exchange (NYSE) and state securities regulators, including California's Department of Corporations filed enforcement actions against Deutsche Bank Securities and a number of other Wall Street securities firms.

The subpoenas were issued by the regulators as part of an ongoing investigation into claims regarding fraudulent research. The $7.5 million additional penalty was for failing to promptly produce all e-mail, which delayed the investigation for over a year.

Deutsche Bank Securities was also required to dramatically reform its practices, including separating its research and investment banking departments at the firms, restructuring how research is reviewed and supervised, prohibiting analysts from being compensated for investment banking activities and making independent research available to investors.

Deutsche Bank’s CEO Indicted for Payoffs

Deutsche Bank’s CEO, Josef Ackermann, was indicted on for his involvement in a committee that approved alleged “payoffs” to executives of Mannesmann, a British telecom company. The payments, totaling $108 million dollars were made to Mannesmann’s former CEO and a number of other Mannesmann employees after the company was taken over by Vodafone.  Ackermann and five others have been accused of breach of trust against shareholders.

Deutsche Bank Fined Again over E-mails

After being fined $7.5 million for withholding e-mails, Deutsche Bank was fined again, this time $1.65 million, for failing to retain e-mail records.

The SEC, NYSE, and NASD announced the fine and required Deutsche Bank, and other the firms which were also fined, to review their document storage procedures.

Among the documents subpoenaed by regulators, but destroyed, were records detailing how Deutsche Bank voted regarding the Hewlett Packard/Compaq merge. Federal attention was raised after a lawsuit by its former founder against Hewlett Packard questioned the relationship of the company with Deutsche Bank. Although later dismissed, the suit alleged that HP “coerced”

Deutsche Bank (a holder of 25 million shares) into voting for an HP/Compaq merger by threatening to withhold its business from the firm should it vote against the move.

Deutsche Bank Fined over High Yield Bond Trades

The NASD announced it ordered Deutsche Bank Securities, Inc. and other firms to each pay $5 million for rule violations relating to trading in corporate high yield bonds. Deutsche’s securities unit was cited for charging excessive markups or markdowns, inadequate record keeping and supervision violations. The firms were also ordered to revise their written supervisory procedures for high yield bond sales and purchases within 60 days.

Deutsche Bank Securities and others were also charged with trade-reporting violations.  Deutsche Bank and one other firm were charged with failing to register one or more supervisors on the firms' high yield desks.

"NASD rules require that firms sell all securities, including corporate high yield debt, at fair prices," said the NASD’s Mary L. Schapiro. "NASD markup policy has been clear that markups and markdowns generally should not exceed5 percent and, for most debt transactions, that figure should be lower.

Numerous SEC and court rulings have reiterated these principles throughout the years. In the cases we announce today, markups and markdowns were clearly outside these well-established guidelines."

The NASD found that Deutsche Bank charged markdowns ranging from 9.6 percent to 16.6 percent on seven pairs of trades. The firm bore little or no risk in these transactions.

Deutsche Bank Fined For Reporting Violations

The NASD censured, fined $225,000, and required Deutsche Bank Securities to revise its written supervisory procedures, for lapses in “short interest” reporting.

The findings also stated that the firm’s short positions were incorrectly classified and the firm failed to make corrections in a timely and effective manner.  Positions were also reported to NASD inaccurately and incorrectly netted short positions against long positions.

In addition, NASD found that the firm’s supervisory system failed to provide for supervision reasonably designed to achieve compliance with applicable securities laws, regulations, and NASD rules concerning short interest reporting.

 

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