Deutsche Bank Securities (DBS), the US arm of Germany's Deutsche Bank, has been fined a total $1.275 million by Nyse Regulation in two disciplinary actions involving supervisory violations including the failure to monitor its computer systems and detect the misuse of confidential data.
In one case Nyse Regulation has fined DBS $325,000 for failing to supervise an employee who was using another member firm's password to access confidential data.
From November 2001 through to January 2003, DBS failed to supervise Wei Wu , a former director in its index development group, who was found to be accessing and using his former employer's password protected information through a proprietary Web site.
Wu utilised the firm's research reports and bond indices data for several purposes on more than 200 occasions. Wu also provided data to other colleagues and distributed his password to one other colleague at Deutsche Bank's London branch.
"It was widely known that the employee was accessing this data from the Firm A web site, says Nyse Regulation in a statement.
The regulator says DBS violated its rules regarding business and audit trail reporting obligations, and the violations "were caused in large part due to the firm's failure to adequately monitor its own computer systems, as well as the data submissions its customers made through the firm or using machinery identified with the firm".
Nyse has also fined DBS $950,000 for failing to report conflicts on research reports from July 2002 to June 2004. DBS also failed to disclose conflicts during analyst appearances.
Nyse Regulation says throughout the period there was an understanding by senior research managers that the firm relied on a manual process to input data to generate conflict of interest disclosures. But even when those managers were informed that the process was cumbersome they failed to "undertake a systematic review of the firm's research disclosures or to verify that the appropriate research disclosures were included in the published reports".