Daily Management Review

Deutsche Börse is preparing Plan B while its CEO is being investigated


08/10/2017


Deutsche Boerse is already developing a plan of action in case its chief executive director, Carsten Kengeter, who is being investigated, will have to resign. This is reported by German newspaper WirtschaftsWoche.



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According to the newspaper, Karsten's position in case of his dismissal may be occupied by his current deputy Andreas Preuss. Gregor Pottmeyer, financial director of Deutsche Boerse, is also considered as a candidate for the post of new chief executive officer of the German stock exchange.

Carsten Kengeter is having a bad year. His deal with London Stock Exchange Group Plc for $ 14 billion fell through, he is being investigated on suspicion of insider trading, and the regulator in Germany is checking reliability of his entire management team.

Earlier, Head of Deutsche Boerse advertised new Scale market as an ideal way for small German companies to raise capital. However, just four months after the launch of Scale, the country's market regulator began an investigation in connection with suspicious transactions on shares of one of the companies in this market. Shares of Naga Group AG, a Hamburg finance and technology company, soared after an IPO, but collapsed soon after.

"If there are problems with the IPO, this is a bad sign, and this creates a bad reputation for the new Scale market," said Alexander Thomas, a partner in the law firm Pinsent Masons. "If there are market manipulations, this is not the fault of Deutsche Boerse, but this creates a bad reputation. You destroy the confidence that you want to create. "

The investigation into possible manipulation of Naga shares followed a five-month investigation into Kengeter on suspicion of using insider information about the deal with the London Stock Exchange.

Investigators are studying a case when Kentgener purchased shares of Deutsche Boerse for € 4.5 million in December 2015 - two months before it became known that Deutsche Boerse is in talks to merge with the LSE. After the information became public, Deutsche Boerse's quotes rose sharply. In March, the European Commission blocked the merger of LSE and Deutsche Boerse. LSE refused to sell the Italian MTS platform, as the European Commission insisted.

The operator of the exchange did not want to spoil relations with regulators and clients in Italy. The share of the Italian business, of which MTS is a part, accounts for about 25% of London Stock Exchange Group's operating profit.

The plans for the merger of LSE and Deutsche Boerse were announced in March 2016. As a result, it was planned to create a powerful platform for derivatives trading and strengthen ties between the London financial center and Frankfurt, where the ECB is located and instrument settlements in euros are taking place. The total capitalization would be 24 billion euros.

source: wiwo.de






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