Deutsche Bank penalised over mis-stated accounts

Deutsche Bank logo Image copyright Getty Images

Deutsche Bank is paying $55m (£35.7m) to settle civil charges for allegedly mis-stating financial reports.

The US Securities and Exchange Commission (SEC) investigated the German bank for the way it accounted for certain assets in reports filed during the financial crisis.

The SEC said it over-valued some of these and did not have sufficient collateral to cover potential losses.

Deutsche is settling without admitting or denying the charges.

The bank said there was no reliable model at the time to value those trades, which were made in the aftermath of the credit crisis and the subsequent collapse of Lehman Brothers.

The SEC said the risk for potential losses ran into billions of dollars - a risk which the SEC says was not properly reported to investors.

Its investigation found that Deutsche overvalued the value of certain transactions designed to protect against losses on securities in the then highly volatile credit markets.

The collateral covering the portfolio was only a fraction, approximately 9%, of the $98bn total in purchased protection.

"At the height of the financial crisis, Deutsche Bank's financial statements did not reflect the significant risk in these large, complex illiquid positions," said Andrew Ceresney, director of the SEC's enforcement division.

"Deutsche Bank failed to make reasonable judgments when valuing its positions and lacked robust internal controls over financial reporting."

Last week, Deutsche Bank encountered anger from its shareholders at its annual general meeting.

One of the causes of investor unease was the mounting tally of regulatory fines.

Investors singled out a $2.5bn fine to settle investigations into the bank's involvement in the rigging of the Libor interest rate.

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