Deutsche Bank will pay nearly $4.5 million to settle U.S. SEC civil charges that it failed to police traders and salespeople who lied to customers about bond prices, the regulator said.
Deutsche Bank said it has taken “appropriate disciplinary action, including termination in some instances.”
A lawyer for Solomon did not immediately respond to requests for comment.
The charges extend a more than five-year federal crackdown into deceptive bond trading practices overseen mainly by the U.S. Attorney’s office in Connecticut.
U.S. authorities have charged at least 11 people, including six from Nomura Holdings Inc, and eight have been criminally charged.
According to the SEC, Deutsche Bank and Solomon, who had also been head trader on the CMBS desk, failed to stop traders and salespeople from overcharging customers, including by misleading them about prices the bank had paid.
The SEC outlined several instances of alleged deception, including where a trader once sold a bond for 58.75 after telling a customer that Deutsche Bank had paid 58.50, when in fact Solomon had paid just 58.
Aware this occurred, Solomon allegedly called a salesperson.
“Not that you would, but, uh, [the buyer] thinks we’re just working for a quarter point on those bonds, ok?” Solomon said.
“I would never.... We need to make money,” the salesperson replied.
“You deserve to make money, and I deserve to get paid.”
Deutsche Bank made $187,500 on that trade, including $125,000 from the trader’s misstatement, the SEC said.
Banks must “communicate accurate pricing information when transacting with customers in opaque markets,” Daniel Michael, chief of the SEC enforcement division’s complex financial instruments unit, said in a statement.