Deutsche Bank has been banned from prop and derivatives trading in South Korea for six months because regulators think a local unit of the bank caused a $26 billion dip in the Kospi index in the final minutes of trading one day last November, Bloomberg reports.
It’s alleged Deutsche made about $39 million in “unfair” profits on that day.
Though regulators haven’t filed a complaint against Deutsche Bank proper (aka the parent company of Deutsche Securities Korea Co.), they’ve reportedly “notitfied” South Korean prosecutors as well as regulators in Germany “about potential misconduct by the parent company,” Bloomberg reports.
Five Deutsche bankers will apparently be investigated for the massive November 11 tumble, but they’re yet to be named.
The bank has said it’s “disappointed” but will cooperate.
The investigation into Deutsche’s Korean brokerage unit began last year — both the bank’s Seoul and Hong Kong offices were questioned over $1.4 billion of sell orders. The bank already got reprimanded for filing a report one minute late on that day, and the $26 billion wipe out has already led to a restriction in the number of contracts investors can hold.
The ban begins in April.