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Prosecutors investigate Deutsche Boerse CEO's 2015 share purchase

By Andreas Kröner and Maria Sheahan

By Andreas Kröner and Maria Sheahan

FRANKFURT (Reuters) - Deutsche Boerse <DB1Gn.DE> said on Wednesday that German prosecutors were investigating a share purchase by its chief executive in December 2015, which was just over two months before the exchange operator announced merger talks.

Deutsche Boerse said the purchase of around 4.5 million euros ($4.8 million) of its shares by Chief Executive Carsten Kengeter at that time was related to the management board's remuneration program. The company and the CEO were fully cooperating with the Frankfurt public prosecutor's office, it said in a statement.

Two people familiar with the case told Reuters that investigators searched offices at Deutsche Boerse's headquarters in Eschborn near Frankfurt on Wednesday in relation to suspected insider trading in connection with the share purchase.

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Kengeter bought 60,000 shares in Deutsche Boerse on Dec. 14, 2015. Just over two months later, Deutsche Boerse and the London Stock Exchange <LSE.L> announced that they were making a third attempt at a merger, pushing up the share price of both companies.

"The accusations are groundless," Deutsche Boerse's supervisory board Chairman Joachim Faber said.

"Only in the second half of January 2016 did the two chairmen and CEOs agree to begin negotiations for a merger of LSE Group Plc and Deutsche Boerse AG," he added.

No one at the Frankfurt prosecutor's office was immediately available for comment.

Kengeter, who attended Deutsche Boerse's New Year's reception in London on Tuesday, was not present during the searches, one of the sources said.

Faber said Kengeter bought the shares ahead of an end-December deadline set by the group's management remuneration program.

Under the program, he was allowed to make a one-time purchase of shares worth up to 4.5 million euros, which he would be required to hold onto until the end of 2019.

As part of the deal, he received what the company calls "co-performance shares" in the same amount, whose value depends on a mix of Deutsche Boerse's profits and its share price movement relative to a benchmark index.

Deutsche Boerse's stock has gained around 11 percent since Kengeter bought the shares.

Kengeter joined Deutsche Boerse in April 2015, having previously worked at investment bank UBS <UBSG.S> and Goldman Sachs <GS.N>, and moved up to the helm two months later.

Financial sources have told Reuters that he started discussing with the rest of the management board possible avenues for growth, including a deal with LSE, right after assuming his position as CEO. But they said that concrete preparations for a merger and initial talks did not take place until January 2016.

(Editing by Greg Mahlich and Susan Fenton)

 
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