Court rejects Deutsche Boerse insider trading settlement

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The failed merger between Deutsche Boerse and London Stock Exchange may have left the CEO of the German trading platform, Carsten Kengeter, with more than just a headache. On Monday night, a court in Frankfurt refused to approve a planned settlement between Kengeter and criminal prosecutors, which would have cleared the CEO of insider trading allegations.

Kengeter had purchased 60.000 Deutsche Boerse shares worth €4.5m in December 2015, just before formal merger talks between LSE and Deutsche Boerse were initiated. When the news broke on 23 February 2015, Deutsche Boerse shares immediately rose by more than 7%.

Kengeter’s purchase was part of an employee stock purchasing programme in September 2015, which encouraged him to hold the shares until 2019.

Both Kengeter and Deutsche Boerse now face allegations of insider trading which the parties hoped to resolve with through a settlement payment of €500.000 from Kengeter personally and €10.5m by Deutsche Boerse.

However, the prosecutor rejected the deal in a surprise announcement yesterday night, despite having suggested its willingness to drop the allegations in exchange for a settlement in July 2017.

A spokesperson of the court in Frankfurt confirmed the news to InvestmentEurope but was not available for further comments.

Deutsche Boerse released a brief statement to its shareholders, acknowledging the court’s decision to its shareholders. “In light of the significance of the proceedings the court considers it appropriate to continue the investigation proceedings at this time.”

Following the failure to reach a settlement, the investigation will be returned to the public prosecutor, who could either negotiate a new settlement or close the proceedings.

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