Deutsche Boerse CEO resigns amid weak results and insider trading probe

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Carsten Kengeter has announced his resignation as chief executive officer of Deutsche Boerse, following a failed settlement of insider trading allegations and weak profit reports earlier this week.

Kengeter announced in a statement that he will step down by the end of the year: “in order to allow the company to focus on business, clients and growth, and to avoid further burdens caused by the ongoing investigation”, he also stressed that he plans to cooperate thoroughly with the authorities until the investigation has ended.

German prosecutors accuse Kengeter of insider trading after he purchased €4.5m worth of Deutsche Boerse shares just weeks prior to a planned merger announcement with London Stock Exchange, which led to a jump in share prices.

Earlier this week, a settlement deal involving a personal payment of €500.000 by Kengeter and €10.5m by Deutsche Boerse failed and the case has now been returned to the public prosecutor.

Besides the insider trading allegations, Deutsche Boerse also had to report this week that, desite the DAX reaching record levels, it falls short of hitting its profit target for this year. Deutsche Boerse had aimed to deliver profit growth of 10 to 15 percent and 5 to 10 percent annual growth in net revenue instead, it reported a net revenue of 3 percent and a net profit growth of 4%.

Just hours after the Kengeters announcement, it was CFO Gregor Pottmeyer, rather than Carsten Kengeter, who presented the results. He now takes on Mr Kengeter’s position on an ad interim basis.

Pottmeyer commented on the results: “Our secular growth initiatives are well on track. However, due to prevailing negative cyclical effects, we will very likely not be able to fully meet our targets for the financial year 2017. Nonetheless, the Group remains very well positioned to benefit from secular and cyclical growth over the medium term.

Deutsche Börse Group therefore affirms its forecast for annual earnings growth of between 10% and 15% for 2018 and 2019.”

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