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Deutsche Boerse seeks to close insider trading case by paying fine

Published 09/13/2017, 05:11 PM
© Reuters. FILE PHOTO - Carsten Kengeter, CEO of Deutsche Boerse talks to the media during the presentation of FinTec start-up facilities provided by Deutsche Boerse in Frankfurt
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BERLIN (Reuters) - Deutsche Boerse (DE:DB1Gn) said it has agreed to pay hefty fines for its role in allowing its chief executive to make share purchases which became the subject of insider trading allegations, hoping to draw a line under the case.

Deutsche Boerse CEO Carsten Kengeter made the share purchases shortly before the announcement of formal merger talks with London Stock Exchange (L:LSE) and a subsequent sharp rise in Deutsche Boerse's share price.

In July, the German exchange operator said that the Frankfurt prosecutor had offered a deal to settle the case for fines totaling 10.5 million euros ($12.5 million), but that it needed to deliberate on how to proceed.

On Wednesday it said it had decided to accept the fines to protect the interests of the company but maintained that the allegations were unfounded in all respects.

"By doing so, Deutsche Boerse aims to ensure that the Company can re-focus as quickly as possible on managing the business and leave behind the serious burdens placed on it by the investigation proceedings," it said in a statement.

"Deutsche Boerse, however, does not share the Public Prosecutor's view concerning the accusations raised," it said.

The investigation has cast a shadow over the German exchange operator's efforts to recover from the failed merger with LSE and made the board reluctant to extend Kengeter's contract as CEO.

The company said on Wednesday it would wait until investigations by the German finance watchdog BaFin and the government of Hesse, the state that regulates Deutsche Boerse, are competed before deciding on Kengeter's contract.

Deutsche Boerse said it assumes the proceedings against Kengeter, who has denied any wrongdoing, would be closed subject to conditions.

Last week Kengeter said the disputed stock purchases were a "moral duty".

The 10.5 million euros in fines are for two separate misdeeds. Part is for failing to notify the public promptly about the merger talks with the LSE. The rest is for the design of its executive share-buying scheme that allowed Kengeter to buy shares in the first place.

Kengeter and Deutsche Boerse have said that he was authorized to buy the shares at a fixed time, between Dec. 1 and Dec. 21, 2015, as part of the compensation program - some two months before the merger talks were made official.

Kengeter also received additional virtual shares, whose value depended on the long-term development of the company's value, and is required to hold the stake until the end of 2019.

© Reuters. FILE PHOTO - Carsten Kengeter, CEO of Deutsche Boerse talks to the media during the presentation of FinTec start-up facilities provided by Deutsche Boerse in Frankfurt

($1 = 0.8415 euros)

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