By Selena Li
HONG KONG (Reuters) -Deutsche Bank has been fined HK$23.8 million ($3.05 million) over various breaches between 2015 and 2023, Hong Kong’s securities regulator said on Thursday.
The violations include overcharging clients on management fees, incorrect assignment of product risk ratings and failure to disclose investment banking relationships in certain research reports, according to Hong Kong’s Securities and Futures Commission (SFC).
The SFC said the disciplinary action stemmed from investigations triggered by self-reports made by Deutsche Bank between December 2020 and December 2023.
The bank has resolved the issues and strengthened its internal controls to ensure these incidents do not recur, according to a statement Deutsche sent to Reuters.
In total, the bank overcharged clients in fees by approximately $39 million between November 2015 and November 2023, according to the regulator, which said affected clients have since received refunds.
The regulator said the overcharging resulted from the bank’s failure to apply discounted management fee rates for clients and overstated or understated fund valuations that led to excessive custodian and management fees.
The regulator also found that Deutsche Bank failed to disclose its investment banking relationships with various Hong Kong-listed companies in 261 single stock company reports and 1,590 industry reports issued between September 2014 and September 2021.
In addition, the bank incorrectly assigned lower product risk ratings to 40 exchange-traded funds, resulting in 10 transactions exceeding clients’ risk tolerance level.
On Wednesday, Deutsche’s competitor HSBC was fined HK$4.2 million by Hong Kong’s regulators for failing to properly disclose investment banking relationships in more than 4,200 research reports published between 2013 and 2021.
($1 = 7.8113 Hong Kong dollars)
(Reporting by Beijing Newsroom and Selena Li in Hong KongEditing by Tomasz Janowski)
