Tuesday, April 27, 2010

$DB play down the impact of possible legal action

By William Launder
DOW JONES NEWS WIRES FRANKFURT (Dow Jones)--Germany's Deutsche Bank AG (DB) Tuesday sought to play down the impact of possible legal action it faces in the UP.SO. on how it packaged and traded various products tied to mortgage-backed securities.Chief Financial Officer Stefan Krause told analysts during the bank's first-quarter earnings call Tuesday that Deutsche Bank hadn't received also-called Wells Notice from the Securities and Exchange Commission warning of possible legal charges. The accusations aren't comparable to those faced by.SO. investment bank Goldman Sachs Group Inc. (GS), Krause said.Deutsche Bank sought to ease concerns about possible legal action as politicians and regulators mount a fierce offensive against Goldman Sachs,which faces fraud charges brought by the SEC tied to how it marketed certain collateralized debt obligations. Goldman has denied any wrongdoing.The SEC has sent requests for information to Deutsche Bank and other firms about collateralized debt obligations and other structured products, The Wall Street Journal reported earlier this week, citing sources. Its unclear if the action confirmed by Deutsche Bank on Tuesday is tied to a possible investigation by the SEC. A spokesman for Deutsche Bank wasn't immediately available for comment.Krause confirmed that Deutsche Bank has received subpoenas tied to some investigations in the UP.SO., which are further detailed in the bank's interim report for the first quarter of 2010.The actions involving Deutsche Bank include putative class action lawsuits tied in part to the role Deutsche Bank subsidiaries played in underwriting mortgage pass-through securities issued by Countrywide Financial Corp.,Nova star Mortgage Funding Corp. and other UP.SO. lenders that issued subprime loans leading up to the financial crisis.In its interim report, Deutsche Bank said it was cooperating fully in response to the subpoenas and requests from information from various regulators and government entities.Concerns about pending financial regulation and the possibility the SEC could place charges on other banks which marketed complex derivatives products haven part weighed on Deutsche Bank shares in recent weeks.Shares were down 3.4% near the close Tuesday, even after Deutsche Bank reported a 49% increase in first-quarter net profit in the morning.

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