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Deutsche Bank Securities and Thomas Weisel Partners Settle with Securities Regulators District of Columbia to Receive Over $300,000
(Washington, DC) Under the terms of settlements announced today between securities regulators and Deutsche Bank Securities Inc. and Thomas Weisel Partners LLC, the District of Columbia stands to receive $337,500 upon final acceptance of the terms of the agreement, according to Lawrence H. Mirel, commissioner of the District of Columbia Department of Insurance, Securities and Banking (DISB). The settlements result from allegations of conflicts of interest at brokerage houses where analysts recommended stocks due to improper influence from their investment banking colleagues.
Commissioner Mirel made the announcement following investigations of the two firms by the California Department of Corporations, the U.S. Securities and Exchange Commission, NASD, Inc., and the New York Stock Exchange. The settlements are related to the April 2003 Global Settlement that ten other investment banks reached with the state, federal and industry regulators.
Deutsche Bank will pay a total of $87.5 million: $25 million in disgorgement, $25 million as a penalty for various conflicts of interest, $25 million to fund independent research, $5 million to fund and promote investor education, and $7.5 million for failing to promptly produce e-mail and thereby delaying by over a year the investigation as to Deutsche Bank. Thomas Weisel Partners will pay a total of $12.5 million: $5 million in disgorgement, $5 million as a penalty for various conflicts of interest, and $2.5 million to fund independent research. The District's share of the funds that are designated as penalties will be deposited into the District's general fund.
The investigations of Deutsche Bank and Thomas Weisel Partners, together with the 2003 Global Settlement, are part of a comprehensive regulatory effort to reform the relationship between investment banking and research and to manage appropriately conflicts of interest. Commissioner Mirel stated, "The settlements represent a significant step in our continuing efforts to ensure that investors are treated fairly and provided with objective research."
Under the terms of the settlement, Deutsche Bank is also required to distribute $2.5 million to the Investor Protection Trust (IPT), which will use the money to fund investor education initiatives on the state and national levels. The IPT is an established charitable organization with experience handling settlement funds and a history of investor education successes. The District's share of the IPT funds will be allocated to investor education programs in the District of Columbia
The settlements were negotiated by California, the District of Columbia, and Maryland and unanimously recommended by the Board of Directors of the North American Securities Administrators Association. The Department's investigative team was lead by Theodore A. Miles, Director of DISB's Securities Bureau, and included the following staff members: Lilah R. Blackstone, J. Barron Knight, Adam Levi, J.Michael McManus, A.E.T. Rusch and Vartan Zenian.
Commissioner Mirel noted, "These enforcement actions, coupled with pending reforms in the mutual fund industry, should help to restore investor confidence."
Swap: In general, the exchange of one asset or liability for a similar asset or liability
Swap: In general, the exchange of one asset or liability for a similar asset or liability for the purpose of lengthening or shortening maturities, or raising or lowering coupon rates, to maximize revenue or minimize financing costs. This may entail selling one securities issue and buying another in foreign currency; it may entail buying a currency on the spot market and simultaneously selling it forward. Swaps also may involve exchanging income flows; for example, exchanging the fixed rate coupon stream of a bond for a variable rate payment stream, or vice versa, while not swapping the principal component of the bond. Swaps are generally traded over-the-counter.
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Definition:
Named after Charles Ponzi, a man with a remarkable criminal career in the early 20th century, the term has been used to describe pyramid arrangements whereby an enterprise makes payments to investors from the proceeds of a later investment rather than from profits of the underlying business venture, as the investors expected, and gives investors the impression that a legitimate profit-making business or investment opportunity exists, where in fact it is a mere fiction.
Bear Spread
Definition:
(1) A strategy involving the simultaneous purchase and sale of options of the same class and expiration date, but different strike prices. In a bear spread, the option that is purchased has a lower delta than the option that is bought. For example, in a call bear spread, the purchased option has a higher exercise price than the option that is sold. Also called Bear Vertical Spread. (2) The simultaneous purchase and sale of two futures contracts in the same or related commodities with the intention of profiting from a decline in prices but at the same time limiting the potential loss if this expectation does not materialize.
Amortization
Definition:
Liquidation of a debt through installment payments.
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