Deutsche Bank, Germany's largest bank, has become the latest target of the widening US investigation into trading abuses in the mutual fund industry, a person familiar with the situation has said.
New York Attorney General Mr Eliot Spitzer is investigating whether Deutsche Bank's US arm helped investors make illegal after-market trades in mutual funds. The probe could lead to either criminal or civil charges, but no immediate legal moves by Mr Spitzer's office are expected, the source said.
New York state has issued a subpoena asking for documentation about Deutsche Bank's trading practices, the source said.
Deutsche Bank, in a statement, said it is one of at least 88 mutual fund complexes and 34 broker-dealers to receive information requests from regulators about fund practices, and said it is cooperating fully with such requests.
Deutsche Bank, which has an asset management and brokerage unit, is suspected of having helped investors trade mutual funds after the market closed, the source said. It is also being looked at for helping investors profit from rapid trades in and out of the funds, a practice known as market timing.
The Frankfurt-based bank is one of the largest financial services firms in the world. It has tried to build its US retail investor business by buying mutual fund company Scudder Investments and entering into an alliance with INVESCO Funds Group.