Deutsche Bank Korea to pay out $25m in compensation
Deutsche Bank's Korean unit has reportedly been ordered to pay KRW 28bn ($25m) in compensation to five Korean financial firms over unfair trading practises, which were carried out over five years ago; the five companies receiving compensation will be Heungkuk Life Insurance, Heungkuk Fire & Marine Insurance, Meritz Fire & Marine Insurance, and Shinhan Life Insurance. The bank's alleged practises led to major losses for these firms. 

By Choi Kyong-ae



The Seoul Central District Court has ordered Deutsche Bank Korea and Deutsche Securities Korea to pay 28 billion won ($25 million) in compensation to five Korean financial firms for unfair trading practices carried out five years ago, a court spokesman said Wednesday.



In the court ruling released on Nov. 21, Deutsche Bank Korea and Deutsche Securities Korea were ordered to make the compensatory payment to Heungkuk Life Insurance, Heungkuk Fire & Marine Insurance, Meritz Fire & Marine Insurance and Shinhan Life Insurance, court spokesman Lim Kwang-ho said.



"Deutsche's manipulation of stock prices resulted in heavy losses in the five firms," Lim said.



The compensatory damages accounted for about 80 percent of the 34 billion won the five companies requested the two Deutsche units to pay in the litigation, he said.



On Nov. 11, 2010, the Deutsche branches in Seoul placed an order to sell 2.4 trillion won worth of major stocks they held such as Samsung Electronics, POSCO and Hyundai Motor, minutes before the market closed. Consequently, the KOSPI200 Index plunged 2.8 percent, according to local reports.



The court spokesman confirmed the reports, saying investors who bought a put option for the stocks earned big but those with a call option suffered hefty losses.



With a put option contract worth 1.6 billion won, the Deutsche firm enjoyed an investment gain of 44.8 billion won, according to the reports.



Deutsche Bank Korea spokeswoman Kang So-young declined to comment. Deutsche Securities Korea could not be reached for comment.



Prior to the ruling, Korean prosecutors indicted three foreign employees at Deutsche Bank's Hong Kong branch on charges of their involvement in the so-called Nov. 11 Option Shock case. The German companies and affected financial companies have accepted the court ruling without any legal disputes, the reports said.



There are more financial firms who have reportedly filed a suit against the two Deutsche units on the same charges.



Companies including Hana Financial Investment and Hyundai Wise Asset Management also took the matter to court to claim damages worth a total 89.8 billion won. A court ruling on the suit is due out on Jan. 21. Hyundai Wise Asset Management reportedly argued it had nearly 90 billion in losses in the Nov. 11 incident, as it was one of the call option investors, the reports said.



