Deutsche Boerse CEO probed over insider trading allegations

Deutsche Boerse chief executive Carsten Kengeter.
Deutsche Boerse chief executive Carsten Kengeter.PHOTO: REUTERS

FRANKFURT (AFP) - German authorities have opened a probe into stock purchases in 2015 by Deutsche Boerse chief executive Carsten Kengeter, shortly before the announcement of the market's planned merger with the London Stock Exchange, a spokesman said Wednesday (Feb 1).

The inquiry centres on the acquisition by Kengeter of Deutsche Boerse shares worth about 4.5 million euros (S$6.85 million) on Dec 14, 2015, the bourse spokesman told AFP.

Two months later, in February 2016, Deutsche Boerse and the London Stock Exchange unveiled their merger plans, an announcement which sent their share prices shooting upwards.

"The investigators are studying if there is a possible suspicion of insider dealing," the Deutsche Boerse spokesman told AFP, adding that Kengeter had "always been transparent" about the operation.

In a short English-language statement, Deutsche Boerse said the Frankfurt public prosecutor's office "today investigated at Deutsche Boerse AG in respect of a share purchase by its chief executive officer which was carried out on 14 December 2015".

The share purchase was "in implementation of the executive board's remuneration programme as approved by the supervisory board of Deutsche Boerse AG," it said.

"Such (a) programme provides for an investment of the executive board members in shares of Deutsche Boerse AG," it added, saying that it was cooperating "fully" with prosecutors.

The company spokesman said that the board has asked Kengeter "to act as a real entrepreneur" and acquire shares in the company.

"This is what Mr. Kengeter has done," the spokesman stressed, adding the had "always been transparent about his purchase of shares".

Deutsche Boerse board chairman Joachim Faber called the accusations against Kengeter "groundless", arguing that discussions around the merger with the London Stock Exchange did not begin until the second half of January 20106.

Wirtschaftswoche, a German economic weekly, reported that police and prosecutors had carried out searches in relation to the case.

The London Stock Exchange and Deutsche Boerse merger would create a financial markets behemoth competing with the likes of the Chicago Mercantile Exchange and ICE in the United States, as well as the Hong Kong stock exchange in Asia.

The planned merger, which has hit turbulence after last year's shock decision by Britain to quit the European Union, would ring up one of the globe's biggest groups for stock listings and market data, tying the Frankfurt-dominated eurozone to a post-Brexit London.

The proposed deal has drawn sharp rebukes from France, Belgium, Portugal and the Netherlands, fearful for their own stock exchanges, owned by Euronext.

Deep concerns over competition helped scupper two earlier attempts by Deutsche Boerse and the London Stock Exchange to merge, in 2000 and 2005.

Last month the London Stock Exchange said it had agreed to offload the French arm of clearing house LCH to European rival Euronext in order to ease some of those fears.

London hosts roughly 1.3 trillion euros of euro clearing transactions every year, a status that is now in danger with the British vote to leave the EU.

Deutsche Boerse operates the Frankfurt exchange, as well as the Luxembourg-based clearing house Clearstream and the derivatives platform Eurex.

The Frankfurt prosecutor's office could not be reached Wednesday for comment.