Deutsche Bank officials are reviewing whether some employees exaggerated demand as they marketed new securities backed by risky auto loans, potentially suppressing yields for investors, according to a person with knowledge of the matter.
Bloomberg News reports that the bank has looked at communications between the employees and investors to determine whether such marketing practices were normal salesmanship or if they crossed a line, said the person, who asked not to be named because the matter is private.
The bank has also looked at whether preferential treatment in the allocation of the bonds may have improperly given the biggest investors a leg up over smaller firms, the person said.
The bank’s inquiry comes as the U.S. Securities and Exchange Commission expands an industry wide crackdown on trading and sales practices in markets where mortgages, auto loans and other debt are bundled into securities. It’s also raising new questions in the booming market for subprime auto-loan securities that some regulators have likened to the mortgage-bond binge of the 2000s.
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