Deutsche Bank Securities Inc. has agreed to pay nearly $4.5 million over allegations the firm misled customers who bought commercial mortgage-backed securities, boosting its profits at the expense of clients, according to the Securities and Exchange Commission.
Deutsche Bank settled the allegations for $4.45 million, which includes $3.7 million of repayment to affected customers as well as a $750,000 penalty, the SEC
announced Monday.
Benjamin Solomon, the former head of Deutsche Bank's commercial mortgage-backed securities trading desk, also agreed to a $165,000 penalty and a year-long suspension from the securities industry.
Neither Deutsche Bank Securities nor Mr. Solomon, a 42-year-old resident of Brooklyn, N.Y., admitted to or denied the SEC's findings. The firm fired Mr. Solomon in August 2015.
"The bank cooperated extensively with the SEC's investigation and took appropriate disciplinary action, including termination in some instances," said Troy Gavitt, a spokesman for Deutsche Bank.
Mr. Solomon's attorney, Judd Berstein, who heads an eponymous law firm, didn't return a request for comment by press time.
Between 2011 and 2015, traders and sales personnel made "false and misleading statements to customers in an effort to increase the difference between [Deutsche Bank's] purchase price and sales price and, thereby, increase DBSI's profit," according to the SEC.
The SEC also claimed that Mr. Solomon didn't reasonably supervise traders and failed to take appropriate action to prevent them from making misleading statements to customers. Mr. Solomon hasn't been registered with a securities firm since Deutsche terminated him in 2015, according to his BrokerCheck report.
"We're committed to ensuring that firms communicate accurate pricing information when transacting with customers in opaque markets," said Daniel Michael, chief of the SEC Enforcement Division's complex financial instruments unit.
