FRANKFURT (Reuters) - The head of Deutsche Boerse said insider trading allegations against him were unfounded, pointing out that he did not determine the timing of his share purchases ahead of the announcement of merger plans with the London Stock Exchange (LSE) .
“Insider trading is against my innermost conviction,” Deutsche Boerse Chief Executive Carsten Kengeter told a news conference, adding that he and the German company were cooperating fully with the public prosecutor.
The fate of a plan to create Europe’s largest stock exchange is closely tied to that of Kengeter, who has negotiated a deal that would see him become chief executive of the combined group.
German prosecutors are examining whether a share purchase plan for Kengeter was created at a time when Deutsche Boerse was aware that a merger with the LSE was likely.
In December 2015 Deutsche Boerse allowed him to invest 4.5 million euros ($4.8 million) in Deutsche Boerse shares at 75 euros apiece, while granting him a further 4.5 million euros in shares. Deutsche Boerse said negotiations about a combination with LSE started in the second half of January 2016.
German police and prosecutors this month searched Kengeter’s office and apartment as they investigate whether secret merger talks with LSE were already under way at the time the package was granted.
“When I purchased the shares using my own funds, I did not do so at a time of my own choosing,” Kengeter said on Thursday.
“I did so between 1 and 21 December 2015 within a time-frame fixed by the supervisory board,” he said, adding that the shares were subject to a holding period until the end of 2019.
He declined to say whether it was already clear in December 2015 that a merger with LSE would be attempted, saying he could not comment on the ongoing investigation.
Deutsche Boerse and LSE are proposing basing the main holding company’s headquarters in London, despite calls by regulators in the German state of Hesse to transfer more responsibility to Frankfurt. The Brexit vote has amplified those demands.
Kengeter responded to critics by saying a failure to complete the 25 billion euro ($27 billion) merger with LSE would weaken Germany’s main financial center, Frankfurt.
“Any concerns that Frankfurt as a financial center might be disadvantaged by the proposed business combination fail to recognize one thing: the biggest risk to Frankfurt... is doing nothing,” he said.
Kengeter said that Deutsche Boerse would create an additional 300 jobs in Frankfurt, adding that he was engaged in constructive talks with policymakers in Hesse, Deutsche Boerse’s home state, and with antitrust regulators in Brussels.
Regardless of where the combined holding company is headquartered, the regulatory laws ensure that Frankfurt retains key responsibilities over the Frankfurt Stock Exchange and Eurex Deutschland, Kengeter said.
“The two exchanges as well as post trading and the market data business will remain in Frankfurt, even after the merger,” Kengeter said.
The state regulator in Hesse has the right to veto a deal since it grants Deutsche Boerse its operating license and local politicians have made clear they expect Deutsche Boerse to make more concessions to strengthen Frankfurt’s role.
Asked whether he could envisage moving the overall headquarters to Frankfurt, Kengeter said, “This is a speculative question which I currently cannot answer.”
Regulators in Brussels and Hesse’s capital Wiesbaden need to give the green light by the end of June to prevent the current offer from expiring, Kengeter warned.
Editing by Maria Sheahan/Keith Weir