Deutsche Bank starts investigation into involvement with some customers

(Reuters) – Deutsche Bank AG said on Sunday that it began an investigation into involvement with some clients after the Financial Times earlier reported that the German lender was investigating the alleged misappropriation of investment bank products.

“We started an investigation regarding our involvement with a limited number of customers. We cannot comment on the details of the investigation until it is completed, ”said a Deutsche Bank spokesman in an emailed statement late on Sunday.

The Financial Times reported that the lender was investigating whether his team incorrectly sold sophisticated investment banking products to clients, in violation of European Union rules, and then conspired with individuals from these companies to share the profits.

The internal investigation was sparked by customer complaints last year, the newspaper reported citing people familiar with the process, adding that the investigation initially focused on the table in Spain, which sells hedges, swaps, derivatives and other financial products.

An audit found that the bank misclassified client companies according to the rules in the Financial Instruments Markets Directive (Mifid), which require banks to separate their clients by levels of financial sophistication, according to the newspaper.

Sources told the newspaper that the creditor believes that some of its employees intentionally sold inappropriate or inappropriate products to customers who may not have been able to understand and take the risk they were taking with these positions.

The investigation, called Project Teal, is also investigating allegations that there was collusion between employees of the German bank and employees of some of the customers who purchased the inappropriate products.

The scope of the investigation was later extended to the rest of Europe, but it was believed that only customers based in Spain and Portugal were affected, a source told FT.

The investigation is coming to a conclusion and the bank will soon have to make final disclosures to regulators, the newspaper said, adding that the bank’s top regulators, BaFin and the European Central Bank, had been informed.