The bits of information, called “hoots” or “squawks,” were given over internal speakers known as “squawk boxes.” The securities regulator said Deutsche Bank failed to establish the required supervision over employees’ access to hoots or their communications with customers about the hoots, even though the company was aware of multiple red flags about the dissemination of confidential information.
Germany’s largest lender neither admitted nor denied the charges, Finra said, but consented to the entry of the regulator’s findings. A representative from Deutsche Bank declined to comment.
Finra said Deutsche Bank was aware that hoots involving research and trading could contain confidential or price-sensitive information, and of the risk that nonpublic information could be communicated through them. But the bank ignored warnings such as audit findings and recommendations, and multiple internal warnings from its compliance department, Finra said.
“Recognizing and responding to red flags is the hallmark of proper supervision, particularly in areas involving confidential information,” said Brad Bennett, Finra’s chief of enforcement.
The regulator said Deutsche Bank agreed to provide a written certification that it has adopted and implemented supervisory systems and written procedures concerning hoots.
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This article was first published by The Wall Street Journal