Deutsche Bank (DB) - Get Deutsche Bank AG Report may have violated a criminal settlement when it did not notify prosecutors about an internal complaint against its asset management arm's sustainable investing business, according to the U.S. Department of Justice.
The DOJ says that the complaint against asset manager DWS Group was for overstating how much it used environmental, social and governance criteria (ESG) to manage its assets.
U.S. authorities became aware of the issue through a Wall Street Journal article in August and not from the bank, which had ongoing disclosure and compliance obligations due to a previous criminal settlement, the Journal reports.
That settlement, reached in January, saw Deutsche Bank agree to pay $130 million for its involvement in overseas corruption and market manipulation.
If the DOJ decides to pursue a breach of agreement, the German bank's settlement could be dissolved and DB could face indictment and prosecution, according to the settlement.
A final decision on what to do has not been reached by the DOJ, the Journal reported. However, the DOJ has indicated that it will be more hawkish in pursuing the misdeeds of companies.
“You are going to see, in the days and weeks to come, a desire and a focus on making sure companies are living up to those commitments, and when they don’t, there will be consequences,” Deputy Attorney General Lisa Monaco said at a recent Wall Street Journal event.
DWS had denied that it overstated how much it used ESG criteria to manage assets before the Deutsche settlement.
Shares of DB were falling 3.2% to $12.50 at last check in afternoon trading Thursday .