Germany's latest corporate scandal has claimed the head of its biggest stock exchange with Deutsche Boerse AG (DBOEY) CEO Carsten Kengeter stepping down amid accusations of insider trading linked to a failed merger attempt with the London Stock Exchange Group. (LNSTY)
Kengeter offered his resignation to the group and will leave at the end of the year, the company said Thursday after a extraordinary meeting of its supervisory board, around two years after he bought 60,0000 Deutsche Boerse shares for around €4.5 million ($5.3 million) that surged in value when a takeover proposal for the LSE was announced a few months later.
"It was with deep regret that the supervisory board accepted this request and unanimously thanked Carsten Kengeter for his vision and leadership," the Deutsche Boerse said, adding it would "allow the company to focus its energy back onto clients, business and growth and to avoid further burdens caused by the ongoing investigation".
The stock purchases not only caught the attention of German market regulators but also complicated talks to tie the two exchange operators together. The dealwas blocked by European regulators in March and Kengeter ultimately offered to pay a €500,000 fine -- with the company accepting a €10.5 million penalty -- to close the matter entirely.
A Frankfurt court, however, rejected the settlement offer earlier this week and the country's financial markets watchdog, BaFin, will likely continue its probe into the purchases, which both Kengeter and the company continue to insist were honest and legitimate.
Nonetheless, Kengeter's resignation marks the latest in a series of scandals that have rocked some of the biggest corporate names in Europe's biggest economy.
European Union officials said in July that they're looking in to allegations of price fixing among the country's biggest carmakers, including Volkswagen (VLKAY) , BMW (BMWYY) and Daimler (DMLRY) , after a Der Spiegel report said the groups had been colluding on various technical and commercial issues for decades.
Germany's biggest lender, Deutsche Bank, agreed to pay a $7.2 billion settlement with the U.S. Department of Justice earlier this year linked to the mis-selling of mortgage back securities in the run-up to the global financial crisis while Volkswagen is only just emerging from its own "Dieselgate" scandal that cost the world's biggest automaker more than $30 billion in fines, penalties and buybacks.
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