Deutsche Bank Securities fined $7.5m by FINRA for misrepresenting subprime products

23 July 2010

Deutsche Bank Securities has received a fine of $7.5 million for supposedly making errors in its representation of delinquency data connected to subprime mortgage products.

According to the Financial Industry Regulatory Authority (FINRA), the bank’s unit issued a prospectus of subprime securities during 2006 in which it failed to report the full percentage of delinquent mortgages.

The regulator claimed that Deutsche Bank Securities did not correct inaccurate historical delinquency rates provided by a number of third party vendors in connection with investment products from 2007.

Deutsche Bank Securities is also reported to have failed to introduce an effective reporting system to check the accuracy of historical delinquency rates for the products.

James S Shorris, FINRA executive vice-president and acting chief of enforcement, said: “It is critically important that firms provide accurate information for their customers to use in evaluating investments.”

Renee Calabro, a spokeswoman for Deutsche Bank, said: “We have cooperated with FINRA throughout its investigation and are pleased to have resolved this matter.”

FINRA stated that although the firm agreed to pay the settlement fee, it has not admitted or denied the allegations.

By Jim Ottewill

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