is the latest company to settle a three-year investigation into abusive mutual fund trading, paying a total penalty of $208 million.
Deutsche, in settling with New York Attorney General Eliot Spitzer and the
Securities and Exchange Commission
, is paying $102 million in restitution and $37 million in fines and reducing the fees it charges mutual fund investors by $86 million.
The German-based bank also is agreeing to improve its internal controls and oversight of its mutual fund business.
Regulators charge the bank's mutual fund operation permitted hedge funds and other traders to make improper trades in some of its funds, something that hurt long-term fund investors. Deutsche's funds specifically permitted improper market timing.
Market timing is the rapid buying and selling of mutual funds by favored traders. Such trading harms long-term fund investors by diluting the value of the funds held.
Deutsche says that the settlement already has been included in prior legal reserves and that no additional financial impact is anticipated.
The company is still in discussions with the Illinois Secretary of State regarding market-timing matters. It expects a settlement of $6 million. Approximately $4 million of that settlement will go toward investor education, while the other $2 million will be paid to the Securities Audit and Enforcement fund.
Compared with some others, Deutsche Bank got off easy. In August,
agreed to pay $600 million to regulators and federal prosecutors over market-timing trades in its now-defunct brokerage arm.
In all, Wall Street firms, mutual fund companies and hedge funds have paid nearly $4 billion in fines and restitution.
Shares of Deutsche Bank rose 78 cents, to $133.37.