Denmark’s financial watchdog has reported Danske Bank A/S to police for violating regulations designed to protect investors from market manipulation.
Denmark’s biggest bank routinely entered into agreements to buy or sell financial instruments without any change in ownership of the securities, the Financial Supervisory Authority in Copenhagen said on Wednesday.
“Danske Bank has clearly had insufficient oversight of its trading in financial instruments,” the FSA said. That lack of monitoring made it possible to carry out so-called wash trades. The FSA said it didn’t look into whether the misconduct, which took place between 2016 and 2019, affected pricing.
The bank’s shares fell as much as 1.9%, after having traded 3.7% higher earlier in the day.
The scandals have cost multiple Danske executives their jobs. Former CEO Thomas Borgen, who was fired in late 2018, has since had preliminary criminal charges brought against him for his role in the bank’s laundering scandal.
In an interview before the FSA published its decision to report Danske to the police, the bank’s chairman, Karsten Dybvad, said dealing with the fallout of the money laundering affair continues to take up considerable resources. “The work load related to it remains high because we have to settle all this, and when we have settled it, we can move on,” Dybvad said.
Danske conceded that its processes to protect against market manipulation were inadequate. Chief Compliance Officer Philippe Vollot said the bank began to correct gaps in its monitoring and systems last year.
“The so-called opposite trades were due to insufficient procedures, and we have introduced new controls designed to prevent something similar from happening again,” Vollot said. “We have not seen any indication of intentional wrongdoing or any harm to customers or market participants.”
Danske was among four banks told by the FSA in December to improve surveillance of market transactions. The agency said back then that the banks didn’t systematically monitor the communication leading up to orders being placed by clients, but only checked phone recordings and emails when there was a firm suspicion of market abuse.