A former Deutsche Bank trader agreed to settle a U.S. regulator’s allegations that he mis-marked loans tied to commercial-mortgage-backed securities to boost his profits.
Bloomberg News reports that Tianyu “Arnie” Zhou inflated the value of certain loans by submitting inaccurate data on bond coupons to Deutsche Bank’s valuation group from 2013 to 2015, the Securities and Exchange Commission said. Without admitting or denying the regulator’s findings, Zhou agreed to pay a $50,000 penalty and to a minimum three-year industry bar.
“Mr. Zhou is pleased to have this matter resolved,” said Seth Levine, his attorney at Levine Lee LLP.
The SEC has made policing bond valuations a priority. The agency and the Justice Department have brought civil and criminal cases against traders for lying about bond prices to customers. The SEC is using algorithms to comb through bond trading and has found billions of dollars worth of problematic transactions.
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