FRANKFURT (BLOOMBERG) - Deutsche Bank said on Sunday (Jan 24) it was conducting an internal investigation following a Financial Times report describing bank employees in a profit sharing scheme that sold people risky investments they didn't understand.
"We initiated an investigation in relation to our engagement with a limited number of clients," a bank spokesman said in a statement. "We cannot comment on details until all aspects of the investigation are complete." He declined to confirm anything in the FT report or to answer additional questions from Bloomberg News.
According to the FT report, Deutsche Bank began looking into the actions of some employees following client complaints last year. The inquiry originally focused on a desk in Spain that sells hedges, swaps and derivatives, but the investigation ultimately stretched across Europe.
The probe, which had the code name Project Teal, found the bank had wrongly categorized client firms under the Markets in Financial Instruments Directive rules, which require banks to separate their clients by levels of financial sophistication, the FT said.
The bank believes some of its employees knowingly sold unsuited products to customers who may not have been able to understand and accept the risks they were taking, the FT said, citing the people.
The investigation is looking at whether its staff sold investment banking products to clients that breached those EU rules - and then colluded with individuals to split the profits. The bank is investigating what appears to be a broad pattern of misconduct rather than an isolated occurrence, the FT said, citing people.
This misstep would be the latest in a string of wrongdoings by the German lender in recent years. It's paid billions in fines and settlements for misconduct ranging from money laundering to selling toxic mortgage securities and rigging benchmark interest rates.