Insider Trading

Still On the Hook

Carsten Kengeter
Not out of the woods yet: Deutsche Börse boss Carsten Kengeter. Source: DPA

When a company is prepared to pay a €10.5 million ($12.5 million) legal settlement, executives probably have better things to do than hold speeches about corporate governance. This was certainly true for Joachim Faber, supervisory board chairman of German stock-exchange operator Deutsche Börse. On Wednesday, Mr. Faber cancelled a conference appearance in order to decide how to respond to allegations that its chief executive had engaged in insider trading.

CEO Carsten Kengeter has been under investigation since February, when it emerged he purchased Deutsche Börse stock shortly before his company launched a takeover bid for the London Stock Exchange. While the bid eventually collapsed, the announcement initially sent the stock soaring.

Mr. Faber and the other board members have firmly rejected prosecutors’ allegations, yet they all voted in favor of a settlement with prosecutors Wednesday night. A spokesperson for Deutsche Börse said the company hopes it can finally “put the serious burden of the investigation” behind it. Observers noted an extended investigation could have easily lasted another two years, diverting valuable resources from Deutsche Börse’s core business.

That doesn’t mean the matter is over – not by a long shot. Even after the government settles with Deutsche Börse, Mr. Kengeter won’t be in the clear. Once prosecutors have finished with him, state and federal regulators will look into whether Mr. Kengeter can still be considered “reliable” as the company’s boss. And Deutsche Börse’s shareholders? They’re also looking for the boss to be punished.

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