Deutsche Bank Fined $3 Million for Regulatory Breaches in Hong Kong

Deutsche Bank has been fined HK$23.8 million ($3.05 million) by Hong Kong's Securities and Futures Commission for multiple regulatory breaches, including fee overcharging, misclassification of product risk, and failure to disclose investment banking relationships in research reports. The bank has refunded affected clients and strengthened internal controls to prevent recurrence. This enforcement action comes within days of HSBC Holdings being fined HK$4.2 million for similar disclosure failures.

Hong Kong, July 2, 2025 - Deutsche Bank has been fined HK$23.8 million ($3.05 million) by the Hong Kong Securities and Futures Commission (SFC) for multiple regulatory breaches spanning from 2015 to 2023. The violations include overcharging clients on management fees, incorrect assignment of product risk ratings, and failure to disclose investment banking relationships in research reports. The bank has refunded affected clients and strengthened internal controls to prevent recurrence.

The SFC stated that the disciplinary action stems from investigations triggered by self-reports made by Deutsche Bank between December 2020 and December 2023. Over the eight-year period, the bank overcharged clients approximately $39 million in management and custodian fees. These overcharges resulted from the bank's failure to apply discounted fee rates and misstatements in fund valuations, which inflated both custodian and management fees across portfolios. Additionally, Deutsche Bank assigned lower-than-appropriate product risk ratings to 40 exchange-traded funds, leading to 10 transactions exceeding clients’ risk tolerance levels.

The bank also neglected to disclose its investment banking ties in 261 single-stock reports and 1,590 industry reports published between 2014 and 2021. In a statement to Reuters, Deutsche Bank confirmed that it has resolved the identified issues and strengthened internal controls to prevent recurrence. The bank has refunded affected clients, emphasizing its commitment to regulatory compliance.

This enforcement action comes within days of HSBC Holdings plc being fined HK$4.2 million by Hong Kong regulators for failing to properly disclose investment banking relationships in more than 4,200 research reports published between 2013 and 2021. Both incidents highlight the importance of transparency and accuracy in financial reporting and the need for banks to implement effective systems and controls to prevent such breaches.

References:
[1] https://www.globalbankingandfinance.com/DEUTSCHE-BANK-HONGKONG-FINE-a910d2ee-df44-49be-b0a0-fad4a9c89b5d
[2] https://finance.yahoo.com/news/deutsche-bank-fined-3m-hong-162200217.html
[3] https://www.ainvest.com/news/deutsche-bank-fined-hk-23-8-million-compliance-failures-client-overcharging-2508/
[4] https://www.ainvest.com/news/hong-kong-securities-futures-commission-imposes-23-8mln-fine-deutsche-bank-administrative-breaches-2015-2023-2508/