The US Financial Industry Regulatory Authority (FINRA) has imposed a monetary penalty of $6.5m on Deutsche Bank Securities (DBSI) over serious financial and operational deficiencies mainly related to its enhanced lending program.
According to the market watchdog, the firm failed to maintain its financial records in a transparent way and made erroneous calculations resulting in overstated capitalization and inadequate customer reserves, which were originally recognized during a 2009 probe.
FINRA executive vice president and chief of enforcement Brad Bennett said that a brokerage firm must ensure that its customer assets are protected.
"DBSI’s financial accounting lacked the transparency and accuracy necessary to enable FINRA to oversee the firm and to protect customer assets," Bennett added.
"The lack of transparency in DBSI’s books and records meant the firm was unable to readily monitor the accounts originating out of the enhanced lending business," Finra said in a statement.
DBSI, which neither admitted nor denied the charges, consented to the entry of FINRA’s findings.
Commenting on the issue, a Deutsche Bank spokeswoman said, "We have resolved these issues and are pleased to put this behind us."