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Massachusetts Fines Deutsche Bank $17.5 Million for Conflicts in Marketing

On March 13, 2013, the Massachusetts Securities Division fined Deutsche Bank Securities (DBSI) $17.5 million for conflicts in marketing collateralized debt obligations (CDOs). The matter has since been settled in a consent order.

According to the allegations, DBSI, underwrote approximately $32.2 billion of CDOs between 2004 and 2008. Furthermore, DBSI failed to disclose conflicts of interest arising from its various roles in proposing the structure for, co-investing in, and serving as the structurer for a $1.56 billion hybrid CDO.

Specifically, DBSI did not disclose that a proprietary trading group within the firm partnered with a hedge fund to determine how the CDO would be structured and marketed.

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