The BaFin financial supervisory authority imposed a EUR 23.05 million fine on Deutsche Bank AG for violations of various regulatory obligations under German law.

The fines relate to the company’s failure to adhere to the Securities Trading Act (WpHG) in connection with the distribution of derivatives, along with Postbank’s failure to comply with recording obligations for investment advice and account change assistance requirements under the Payment Accounts Act (ZKG).

Deutsche Bank Penalized for Derivatives and Compliance Failures

BaFin's investigation focused on Deutsche Bank's handling of currency derivatives in Spain. The bank took an insufficiently timely approach to investigating and remedying legal breaches in the distribution of these derivatives. This failure led to proceedings by Spain’s Securities Commission (CNMV), which found Deutsche Bank did not take adequate organizational measures to address the violations promptly.

Additionally, Postbank, a subsidiary of Deutsche Bank, was found to have violated its telephone recording obligations for investment services. During the COVID-19 pandemic, temporary exceptions had allowed for flexibility, but once these exceptions expired, Postbank did not implement the necessary measures to ensure telephone consultations were properly recorded electronically.

Postbank Fined for Account Change Violations

Postbank was also cited for failing to properly handle customer applications related to account change assistance, as required by the ZKG.

The total fine of EUR 23.05 million is divided into three parts: EUR 14.8 million for the “derivative distribution” issue, EUR 4.6 million for the “telephone recording” violation, and EUR 3.65 million for failures in “currency transparent aid” for account changes.

Investment Firms Face Fines for Regulatory Violations

BaFin's decision is legally binding. The fine highlights the importance of investment services firms ensuring robust organizational practices that guarantee compliance with regulatory obligations, particularly in mitigating delays when investigating breaches and implementing corrective measures. Investment firms must also record telephone and electronic communications related to customer orders to protect investor rights and maintain legal certainty.

Failure to meet these obligations can result in fines, with the maximum fine for organizational breaches under the WpHG being EUR 5 million or up to 10% of total turnover. Similarly, violations of the ZKG related to account change assistance can result in fines up to EUR 300,000.

Finance Magnates reached out to Deutsche Bank AG for a comment. At the time of publication, no response had been received.