Merger Plans

Deutsche Börse Chief Denies Insider Trading

  • Why it matters

    Why it matters

    Doubts are growing about the planned merger of Deutsche Börse and LSE, following Britain’s vote to leave the European Union and with the head of Deutsche Börse being investigated owing to suspected insider trading.

  • Facts


    • The head office for the merged group is to be located in London, a plan that is facing growing resistance from the German state of Hesse, where Deutsche Börse is based.
    • Carsten Kengeter is being investigated for insider trading over shares he bought in Deutsche Börse in December 2015, two months before the merger plans were announced.
    • Deutsche Börse recorded net revenue of around €2.4 billion ($2.56 billion) in 2016, up 8 percent year on year.
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Bilanz-Pk Deutsche Börse
Carsten Kengeter is facing tough questions over his alleged involvement in insider trading. Source: DPA

Carsten Kengeter, chief executive of Deutsche Börse, defended himself against accusations of insider trading during the stock exchange’s results presentation Thursday, as he was grilled about shares he had bought two months before the company announced plans to merge with the London Stock Exchange.

He has since been investigated by the public prosecutor’s office over suspected insider trading.

“As you all know, the public prosecutor’s office of Frankfurt is investigating initial suspicions of insider trading,” he said. He then emphasized: “Insider trading goes against everything I stand for.” He went on to evade a number of questions from journalists, including questions about his possible resignation.

Deutsche Börse (project name “Delta”) and the LSE (project name “Luna”) are hoping to merge to form the world’s largest stock exchange operator by turnover. Mr. Kengeter had initially described the deal as “the will of God.” It’s almost as if his comment incurred the wrath of the gods: first Britain voted to leave the European Union, then a study of the benefits to Frankfurt as a financial center angered its London-based partner, and finally the public prosecutor’s office began its investigations.

Pressure is growing on Mr. Kengeter, and many investors are doubtful about whether the deal will be a success.

Klaus Nieding, vice president of Deutsche Schutzvereinigung für Wertpapierbesitz, or DSW, Germany’s largest shareholders’ association, described the investigations as a “PR disaster.” Although he believes Mr. Kengeter must be presumed to be innocent, he said: “No chief executive should be suspected of insider trading, and Deutsche Börse in particular should have been much more careful about this.” He pointed out that the company’s core business is ensuring that stock trading takes place in accordance with the regulations.

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