Deutsche Bank AG agreed to pay about $4.5 million to settle a U.S. regulator’s allegations that it misled clients about how much bonds backed by commercial mortgages were worth, earning the lender bigger profits than it should have made.
Salespeople in its Deutsche Bank Securities unit induced customers to pay higher prices for bonds by misrepresenting how much the bank had paid for them, the Securities and Exchange Commission said in a Monday statement. Ben Solomon, the bank’s former head of commercial mortgage-backed securities trading, was also sanctioned and agreed to pay a $165,000 fine.
“Deutsche Bank and Solomon failed to keep watch as traders generated profits for the firm at the expense of CMBS customers by misrepresenting purchase prices and other important details,” said Dan Michael, chief of the complex financial instruments group in the SEC’s enforcement division.
Deutsche Bank will return more than $3.7 million to its clients over the alleged misconduct and pay a $750,000 fine. Neither the bank nor Solomon admitted or denied the SEC’s allegations.