[NEW YORK] The Financial Industry Regulatory Authority fined Deutsche Bank Securities Inc US$12.5 million on Monday for its failure to supervise which employees had access to confidential information broadcast over internal "squawk box" speakers.
The bank's internal policies failed to ensure that sensitive information meant only for research and trading employees was not also heard by private client services employees, including brokers and financial advisers, according to a FINRA statement.
FINRA did not say any brokers had misused the confidential information, which could include news about major client trades that could affect stock prices. But the watchdog accused the bank of ignoring warnings from its own compliance department that its policies and supervisors did not adequately control who heard the "squawks," according to the settlement.
Deutsche Bank spokeswoman Amanda Williams declined to comment.
The bank did not admit or deny the charges, which applied to a period spanning 2008 to 2014. In addition to paying the fine, Deutsche agreed to implement stricter supervision of employees and written procedures to protect nonpublic information from being shared on squawk boxes.
This is the largest fine the Wall Street watchdog has handed down in a squawk box case. The last large fine levied to a bank in a similar matter occurred in 2009 when Merrill Lynch paid US$7 million to resolve issues related to several brokers and traders who misused squawks to generate illegal profits.