Deutsche Boerse head Carsten Kengeter is being investigated over alleged insider trading. The former UBS investment bank boss looks poised to shake off the charges.
Carsten Kengeter already voiced optimism last week, telling shareholders at the German stock exchange operator's annual meeting in Frankfurt that he is «certain»» that insider trading suspicions against him are unfounded.
The former UBS investment banking head's optimism is based on reality, German daily «Handelsblatt» (in German, behind paywall) reported, citing sources familiar with the matter. Kengeter is in negotiations with Frankfurt prosecutors over dropping the probe altogether, according to the paper.
At the same time, authorities may levy a fine against Deutsche Boerse itself, for disclosing a planned merger with the London Stock Exchage (LSE) too late. The penalty for this is up to 10 million euros, according to «Handelsblatt».
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Kengeter has had a torrid past year after German authorities began looking into a leveraged executive pay scheme set up exclusively for him, shortly before the German firm disclosed an ultimately unsuccessful plan to merge with the LSE.
The German banker, who has said insider trading violates his «innermost conviction,» has taken prominent legal help. He is being advised by Felix Doerr, one of Germany's most respected white-collar defenders, who also advises former Volkswagen boss Martin Winterkorn.
Frankfurt prosecutors appear to be homing in on Deutsche Boerse, the firm, instead of Kengeter as its boss, as finews.com previously reported. Is the Heilbronn-born banker poised for a hat-trick?
Contract Extension?
If the probe is set aside, it paves the way for Kengeter to extend his contract at Deutsche Boerse, where he faced down angry shareholders last week. Negotiations over an extension to his contract, which expires in April, would begin this should begin this summer, but are thought to be on hold until Kengeter can resolve the allegations. With the insider trading obstacle removed, Deutsche Boerse is free to renew Kengeter's contract.
The CEO, who earned 7 million last year, can also hope for a lucrative bonus: he already hinted that he wouldn't voluntarily relinquish his top-up even after the collapsed LSE merger.
Under the controversial pay plan, Kengeter could take home nearly 34 million euros over three years on top of his regular salary and bonus, if he meets profit and share price targets.
Surviving the Perfect Storm
If Kengeter isn't felled by the insider trading probe, it is renewed proof that he is crisis-resistant. He banker survived five tumultuous years at UBS, withstanding the $2 billion rogue trading loss incurred by Kweku Adoboli, a scandal which led to the departure of his boss at the time, Oswald Gruebel.
He was also unscathed by an ill-advised decision to ramp up fixed income again following the bailout, as well as several rigging scandals in the investment bank, including Libor and precious metals which cost UBS billions to settle.
