(Bloomberg) — Deutsche Bank AG’s regulatory headaches just got personal for Chief Executive Officer Christian Sewing.
The 50-year-old banker now has to annually certify that the German lender is adhering to a recent settlement in which U.S. authorities fined the firm for violating swaps reporting rules. The unusual requirement, which could hold Sewing accountable for future missteps by the bank, follows years of compliance failures that have put Deutsche Bank under the microscopes of Washington watchdogs. Many precede his tenure as CEO.
The constraint, imposed last week by the U.S. Securities and Exchange Commission, poses a fresh risk for bank executives whose firms break the rules — a longstanding goal of progressive lawmakers and policy makers. Such demands from regulators could become more common should Democrat Joe Biden win the White House and install new enforcers at federal agencies that police Wall Street.
“It’s not something you see as part of the standard settlement package,” said Stephen Crimmins, a former SEC enforcement attorney who is now a partner at Murphy & McGonigle.
In a statement, Deutsche Bank said the firm’s agreement to the SEC order shows it’s “committed to compliance and cooperation with U.S. regulators.” An SEC spokeswoman declined to comment.
The SEC move applies to anyone who holds the CEO position. What prompted it was a June case from the Commodity Futures Trading Commission — the main U.S. regulator of the $559 trillion global swaps market. The CFTC had penalized Deutsche Bank $9 million over a 2016 outage that prevented the firm from disclosing swaps data for five straight days.
In the months after the breakdown, Deutsche Bank agreed to the appointment of an outside monitor to ensure its compliance with swaps reporting rules due to the “breadth of the failures”