A recent international insider trading investigation netted a fairly big fish. Deutsche Boerse CEO Carsten Kengeter resigned as the probe continued digging deeper into alleged financial irregularities.
Kengeter was the chief executive of the German stock exchange operator, DB, and his departure has a lot of people wondering what the fallout will be for European financial markets, and if those consequences will impact American and Asian markets as well.
The resignation also came after a German court rejected a proposed settlement offer that would have stopped the investigation in its tracks. That offer would have meant both DB and Kengeter paying substantial sums, but the courts were not amenable.
That investigation was sparked back in late 2015, just prior to Deutsche Boerse initiated merger negotiations with the London Stock Exchange. When the potential deal was announced in early 2016, both companies saw their stock prices leap. But the European Union squashed the deal before it could commence.
Initially, Deutsche Boerse defended Kengeter, saying he was well within his rights to buy personal shares in the stock as part of his compensation plan. They added that the purchase had been approved by the firm’s board, and everything was officially on the up and up.
German courts disagreed, launching the investigation that eventually led to Kengeter’s resignation. The DB board said they accepted the CEO’s resignation with “deep regret.”
Meanwhile, attempts to stop the investigation have not worked. German investigators continue to dig into the deal, looking for any dirt they can find.
At present, DB officials are not speaking to the press about the ongoing investigation, and the investigators are being relatively tight-lipped as well. This may be customary, but the doubt and the lack of information have many involved in EU investments not feeling too good about all of this.
Consumer and investor confidence are two prime considerations for any financial market, and the optics of this situation are not playing well with people looking on from the outside. They want answers. They want to know if there really was an inside track on the trading and, if so, who else would have benefitted in addition to the now-former CEO.
Meanwhile, Kengeter is left blowing in the wind. His brand is undoubtedly tarnished, and he really can’t move forward with trying to clear his name as long as the investigation continues. With all these abridged narratives mixing with doubt and suspicion, all parties would benefit from the opportunity to create a new narrative to reassure investors, at home and abroad
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