Bloomberg reports that four Deutsche Bank employees (together with the bank's South Korean brokerage unit) face trial in connection with alleged manipulation which resulted in $29bn in value being wiped from the South Korean stock market (KOSPI) one day last November.
Here's Deutsche's statement:
'Deutsche Bank sincerely regrets the impact on the KOSPI market of an index arbitrage position unwind involving a small number of Deutsche Bank Group employees at the option maturity of 11 November 2010.
It is regrettable that the Seoul Central District Prosecutors’ Office has decided to charge its local Korean brokerage unit, Deutsche Securities Korea (DSK). DSK denies the charges, which will be defended. DSK did not authorize or condone any breach of market regulation. Ultimately DSK has every confidence in the Korean judicial system and that it will be cleared of the allegations.
Deutsche Bank was not indicted in this matter and its business operations in Korea are not affected by this decision.
Deutsche Bank acknowledges the Seoul Central District Prosecutors’ Office’s decision to indict four Deutsche Bank Group employees. The employees concerned are either suspended or on administrative leave and are not involved in bank activities currently. They are expected to respond to these charges in the course of the legal proceedings.
Deutsche Bank is in the process of implementing remedial measures including disciplinary action against the relevant employees where appropriate, and reemphasizing its existing internal control systems.
Deutsche Bank has been, and will continue to be, committed to respecting and abiding by the laws and regulations of Korea. Deutsche Bank has been a substantial participant and positive influence in the Korean financial and capital markets for over 30 years, even through times of economic turbulence. Deutsche Bank remains deeply committed to Korea and to being a responsible participant in the Korean financial markets'.