The Strategist

Head of Deutsche Boerse cannot settle charges of insider trading

10/24/2017 - 15:45

The Frankfurt court refused to approve the decision by the Director General of Deutsche Boerse, Carsten Kengeter, of charges of insider trading. Recall that he had to pay € 500,000. Mr. Kengeter is suspected of using non-public information about the possible merger of Deutsche Boerse with the London Stock Exchange (LSE) in December 2015. According to the court, the investigation of this case must continue taking into account the importance of the circumstances.

Bankenverband via flickr
Bankenverband via flickr
Last night, the Frankfurt court did not give permission to stop the criminal investigation against the CEO of Deutsche Boerse Carsten Kengeter in exchange for paying them € 500 thousand. This payment was to resolve the investigation in connection with the allegations of insider trading brought against him in February.

The investigation was initiated by the Frankfurt prosecutor's office on the fact that Mr. Kengeter bought Deutsche Boerse’s shares worth € 4.5 million in December 2015. Two months later it became known that Deutsche Boerse was in talks to merge with the London Stock Exchange, and a month later an agreement about the transaction was reached. The announcement of the deal led to the growth of Deutsche Boerse’s shares, which, in turn, raised suspicions that Mr. Kengeter was using non-public information about the forthcoming merger. The CEO himself is denying his guilt: he is claiming that the purchase of shares was transparent and was completed a month before the negotiations with the London Stock Exchange began. Deutsche Boerse said that the current purchase of shares was part of a standard program of payment of remuneration for the year endorsed by the board of directors. Nevertheless, an investigation was launched, and in February Mr. Kengeter’s home and office were searched at.

The prosecutor's office brought charges against Deutsche Boerse itself that it did not provide timely information about the negotiations with the LSE. In September, the German stock exchange managed to agree on settlement of the charges in exchange for a fine of € 10.5 million. According to the Financial Times, the prosecutor's office was ready to settle the claims against Mr. Kenger under the condition of paying € 500,000. However, the Frankfurt court refused to give its consent to this. "In view of the importance of the proceedings, the court considers it necessary to continue the investigation," Deutsche Boerse said in its statement. The case was returned to the prosecutor's office.

Deutsche Boerse’s contract with Carsten Kengeter expires in March next year. The Supervisory Board of the Exchange warned that it is ready to extend the agreement only if all prosecutions against the General Director are suspended.