German prosecutors investigate Deutsche Boerse chief

Thu Feb 2, 2017 6:10am EST
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By John O'Donnell and Alexander Hübner

FRANKFURT (Reuters) - German police and prosecutors investigating possible insider trading by the head of Deutsche Boerse (DB1Gn.DE: Quote) have searched the office and apartment of the man who is leading a planned merger with the London Stock Exchange (LSE.L: Quote).

State prosecutors in Frankfurt said the investigation centered on whether secret merger talks with the London Stock Exchange were under way when Deutsche Boerse Chief Executive Carsten Kengeter bought shares in his company in Dec. 2015.

The allegations coincide with growing resistance in Germany toward plans to put the merged group's main headquarters in London, opposition that has gained pace as Britain prepares to leave the European Union.

London is set to become the home of the main holding company of the merged exchanges and the joint board, led by Kengeter, would also be based there.

Kengeter bought shares worth 4.5 million euros ($4.9 million) in his company on Dec. 14, 2015, using an option he was given as part of his contract, just over two months before the merger talks were publicly announced.

Prosecutors said they suspected that Kengeter knew of the possibility of a merger when he bought the shares and that this, if proven, would be insider trading under German law.

"The initial suspicion results from talks held by the management of Deutsche Boerse and the London Stock Exchange between July/August and December 2015 that centered on a possible merger of the two companies and the question of where the holding company could be based," prosecutors said.

There was no immediate comment from Kengeter and a spokesman for Deutsche Boerse declined to comment.   Continued...

Carsten Kengeter, CEO of Deutsche Boerse talks to the media during the presentation of FinTec start-up facilities provided by Deutsche Boerse in Frankfurt, Germany, February 24, 2016. EUTERS/Kai Pfaffenbach