CySEC Fines Commerzbank AG €650k for Market Manipulation

Cyprus regulator CySEC fined 650,000 euros ($730,800) on a German bank, Commerzbank AG over investment operations conducted by Cyprus Popular Bank (CPB) during the country’s 2013 financial crisis.

06 July, 2020 | AtoZ Markets – Commerzbank AG is a major commercial in Germany for individuals and corporations. It provides mortgages, securities brokerage and asset management services, private banking, foreign exchange and treasury services worldwide. In the financial year 2019, it became the second-largest bank in Germany by total balance sheet value. However, last month UK FCA fined Commerzbank £37.8m for failure to implement adequate AML systems.

Cysec Imposes a Fine on Commerzbank AG, but Not CPB

The Securities and Exchange Commission (CySEC) has completed its investigation of market manipulation between Commerzbank AG and CPB. CySEC imposed a cumulative  fine of €650,000 ($730,800) on Commerzbank AG. However, it didn’t impose a fine on CPB because it didn’t want to impose additional burdens on old depositors, bondholders, and shareholders. CySEC also said:

“The shareholding structure of CPB includes former depositors of CPB as well whose deposits were converted into equity as result of the resolution measures.”

In particular, AKEL’s Parliamentarian Eileen Chararanbides alerted CySEC to the investigation of whether both companies had violated laws prohibiting share buybacks. CPB and Commerzbank acted in concert several times in April and May 2011 to manipulate the market concerning CPB stocks. CPB invested in two structured products in February 2008 issued by Commerzbank AG. However, the composition of the underlying portfolio of structured products was dynamic. It was determined by the person appointed as the index sponsor. CySEC also said:

“CPB and Commerzbank AG used the structured product with ISIN XS0345364227 as vehicle. It was in order for Commerzbank AG to act as a surrogate of CPB in a disguised manner. They acted in concert to manipulate the market in relation to CPB’s shares on the 4, 5, 6, 14, 15, 18, 19, 20, 21, 26 and 27 April 2011 and 6 and 30 May 2011.”

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