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Compliance

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Finra Hits Deutsche Bank With $7.5 Million Fine Over Subprime Reporting

The Financial Industry Regulatory Authority said it fined Deutsche Bank with a $7.5 million fine for misrepresenting the percentage of delinquent mortgages in the prospectus of six subprime residential mortgage-backed securities issued in 2006.

The Financial Industry Regulatory Authority said it fined Deutsche Bank $7.5 million for misrepresenting the percentage of delinquent mortgages in the prospectus of six subprime residential mortgage-backed securities issued in 2006.

The regulator also said that Deutsche Bank failed to correct errors by third party vendors and servicers, which underreported the historical delinquency rates of mortgages connected with the sale of 16 more subprime mortgage-backed securities in 2007. Finra added that Deutsche Bank was also negligent for not supervising the reporting of historical delinquency information.

“Future returns on subprime securitizations are affected by mortgage holders who fail to make loan payments,” Finra’s acting chief of enforcement James Shorris said in a statement. “Delinquency rates constitute material information for investors. Deutsche Bank Securities’ failure to ensure that the delinquency information was accurate is an unacceptable failure to meet this important obligation.”

Deutsche Bank agreed to settle the fine without admitting or denying guilt, Finra said in a statement.

As the Senior Editor of Advanced Trading, Justin Grant plays a key role in steering the magazine's coverage of the latest issues affecting the buy-side trading community. Since joining Advanced Trading in 2010, Grant's news analysis has touched on everything from the latest ... View Full Bio

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