Deutsche Bank’s Japanese brokerage unit will probably be penalized by local regulators for breaching rules over excessive spending to entertain clients, two people with knowledge of the matter said.
Bloomberg reports that the Securities and Exchange Surveillance Commission, Japan’s securities watchdog, is poised to recommend as early as Wednesday that the nation’s Financial Services Agency take administrative action against Deutsche Securities, one of the people said, asking not to be identified because the matter is confidential. The FSA may order the brokerage to improve compliance and internal controls, the people said.
The potential punishment would add to the bank’s regulatory woes after it set aside a further $1.6bn to cover legal costs amid global probes into interbank rate rigging and lawsuits relating to the U.S. housing market. Japan’s regulator has been beefing up oversight of the pension industry since it found that AIJ Investment Advisors covered up losses of clients’ money last year.
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