In re DEUTSCHE BANK

 
 
 
 UNITED STATES OF AMERICA 
 Before the 
 SECURITIES AND EXCHANGE COMMISSION 
 
SECURITIES EXCHANGE ACT OF 1934 
Release No. 79083 / October 12, 2016 
 
INVESTMENT ADVISERS ACT OF 1940 
Release No. 4548 / October 12, 2016 
 
ADMINISTRATIVE PROCEEDING 
File No. 3-17622 
 
 
In the Matter of 
 
DEUTSCHE BANK 
SECURITIES INC., 
 
Respondent. 
 
 
ORDER INSTITUTING ADMINISTRATIVE 
AND CEASE-AND-DESIST PROCEEDINGS 
PURSUANT TO SECTIONS 15(b) AND 21C 
OF THE SECURITIES EXCHANGE ACT OF 
1934 AND SECTION 203(e) OF THE 
INVESTMENT ADVISERS ACT OF 1940, 
MAKING FINDINGS, AND IMPOSING 
REMEDIAL SANCTIONS AND A CEASE-
AND-DESIST ORDER   
   
 
I. 
 
 The Securities and Exchange Commission (“Commission”) deems it appropriate and in the 
public interest that public administrative and cease-and-desist proceedings be, and hereby are, 
instituted pursuant to Sections 15(b) and 21C of the Securities Exchange Act of 1934 (“Exchange 
Act”) and Section 203(e) of the Investment Advisers Act of 1940 (“Advisers Act”) against 
Deutsche Bank Securities Inc. (“Respondent” or “DBSI”). 
 
II. 
 
 In anticipation of the institution of these proceedings, Respondent has submitted an Offer 
of Settlement (the “Offer”) which the Commission has determined to accept.  Solely for the 
purpose of these proceedings and any other proceedings brought by or on behalf of the 
Commission, or to which the Commission is a party, and without admitting or denying the findings 
herein, except as to the Commission’s jurisdiction over it and the subject matter of these 
proceedings, which are admitted, Respondent consents to the entry of this Order Instituting 
Administrative and Cease-and-Desist Proceedings Pursuant to Sections 15(b) and 21C of the 
Securities Exchange Act of 1934 and Section 203(e) of the Investment Advisers Act of 1940, 
Making Findings, and Imposing Remedial Sanctions and a Cease-and-Desist Order (“Order”), as 
set forth below. 
 
 

  
 
 2 
III. 
 
 On the basis of this Order and Respondent’s Offer, the Commission finds
1
 that: 
 
SUMMARY 
 
 1. This matter concerns three separate violations of the federal securities laws by 
DBSI:  (1) the failure to establish, maintain, and enforce policies and procedures reasonably 
designed to prevent the misuse of material, nonpublic information generated by its equity research 
analysts, in violation of Section 15(g) of the Exchange Act; (2) the publication of a research report 
that was falsely certified as accurately reflecting the lead analyst’s view regarding the covered 
company, in violation of Rule 501 of Regulation Analyst Certification (“Regulation AC”); and (3) 
the failure to preserve and furnish promptly to the Commission staff certain electronic 
communications relating to DBSI’s business as a broker and dealer, in violation of Section 17(a) of 
the Exchange Act and Rule 17a-4 thereunder.   
 
 2. From at least January 2012 through December 2014 (“the relevant period”), DBSI 
failed to establish, maintain, and enforce policies and procedures reasonably designed to prevent its 
equity research analysts from misusing material, nonpublic information by, among other things, 
disclosing analysts’ as yet unpublished views and analyses that appeared in subsequent DBSI 
research reports, certain changes of estimates by analysts, and short term trading recommendations 
that were inconsistent with the analysts’ published long term ratings.  The risk that material, 
nonpublic information could be misused was heightened by deficiencies in DBSI’s policies and 
procedures pertaining to communications between DBSI’s equity research analysts and DBSI 
customers and DBSI sales and trading personnel.  In particular, although DBSI had certain policies 
and procedures and training in place for its equity research analysts, DBSI failed to establish, 
maintain, and enforce policies and procedures reasonably designed to prevent its equity research 
analysts from disclosing material, nonpublic information to DBSI customers and DBSI sales and 
trading personnel through various customer interactions and internal communications with DBSI 
sales and trading personnel. 
        
 3. DBSI violated the analyst certification requirement of Regulation AC.  On March 
29, 2012, DBSI issued a research report prepared and certified by a senior equity research analyst 
that was inconsistent with the analyst’s personally held view.  In the research report, the analyst 
rated the covered company’s stock a “BUY,” and certified that his recommendation reflected his 
personal views.  In fact, however, the “BUY” recommendation was inconsistent with the analyst’s 
personal view that the company should have been downgraded. 
 
 4. DBSI also failed to preserve, maintain, and timely produce to the Commission staff 
certain electronic communications that had been conducted on an internal DBSI messaging system, 
in violation of the record keeping requirements of Section 17(a) of the Exchange Act and Rule 17a-
4 thereunder.   
   
                                                 
1
  The findings herein are made pursuant to Respondent's Offer of Settlement and are not binding on any 
other person or entity in this or any other proceeding. 

  
 
 3 
 5. Accordingly, DBSI willfully violated Sections 15(g) and 17(a) of the Exchange Act 
and Rule 17a-4 thereunder and Rule 501 of Regulation AC.  
 
RESPONDENT 
 
6. Deutsche Bank Securities Inc., a Delaware corporation with its principal executive 
offices in New York, New York, is a broker-dealer and investment adviser registered with the 
Commission pursuant to Section 15(b) of the Exchange Act and Section 203 of the Advisers Act.   
DBSI is an indirect wholly-owned subsidiary of Deutsche Bank AG, a foreign private issuer whose 
stock is registered with the Commission pursuant to Section 12(b) of the Exchange Act and trades 
on the New York Stock Exchange. 
 
FACTS 
 
A. DBSI’s Equity Research 
 
7. DBSI’s equity research department is comprised of approximately fifty research 
analysts covering almost nine hundred stocks traded in the United States.  DBSI’s equity research 
analysts provide the firm’s customers with investment recommendations and analysis on public 
companies and their stocks through published research reports.  For each covered company, DBSI 
analysts publish reports that include an investment rating that reflects their twelve-month view of 
the stock’s performance, a price target that they expect the stock to reach in twelve months, and 
estimates of the company’s expected upcoming quarterly and annual earnings.  During the relevant 
period, DBSI utilized a three-category investment rating system:  BUY, HOLD, and SELL.  DBSI 
equity research reports are sent to DBSI customers electronically and made available to DBSI 
customers on DBSI’s website.  DBSI research reports also are made available to others through 
third-party research service providers. 
 
8. DBSI also allowed its equity research analysts to publish short term trade ideas on 
a DBSI website named “SOLAR,” which is accessible to all DBSI customers.  DBSI’s policies 
and procedures required that these short term trade ideas be aligned with the analyst’s published 
long term investment rating for that security, unless the analyst had a published long term rating 
of HOLD, in which case a short term trade idea was permitted to be either a BUY or SELL.
2
   
 
9. During the relevant period, DBSI encouraged its equity research analysts to have 
frequent contact with DBSI customers and DBSI sales and trading personnel.  Accordingly, DBSI 
equity research analysts communicated regularly with both DBSI customers and DBSI sales and 
trading personnel by telephone, email, instant messaging, and in-person to answer questions about 
the public companies and the industries and industry sectors that the analysts covered.  DBSI had 
policies and procedures, and trained its research analysts, on how to engage in such 
communications, including that they must speak consistently with their published views.  DBSI 
                                                 
2
  DBSI’s policies and procedures expressly stated that “if the underlying recommendation is a BUY, the [short 
term recommendation] may only be a BUY” and “if the underlying recommendation is a SELL, the [short term 
recommendation] may only be a SELL.” 
 

  
 
 4 
sales and trading personnel conveyed information that they had learned from DBSI equity research 
analysts to DBSI customers.       
 
10. DBSI’s performance evaluation and compensation system for its equity research 
analysts, during the relevant period, took into consideration customer assessments of DBSI’s 
research analysts.
3
  DBSI measured customer satisfaction with its research analysts based, in part, 
on certain independent surveys of investors and other consumers of equity research, such as the 
Institutional Investor magazine’s “All-America Research Team” and Greenwich Associates’ 
“Greenwich Research Team Survey,” as well as votes that each analyst received directly from 
institutional investors through a process known as “broker votes.”  These three rankings accounted 
for more than forty percent of an analyst’s internal performance rating, making them when 
combined the largest component of a research analyst’s performance evaluation.  One DBSI 
analyst acknowledged a customer’s positive appraisal of his work and the customer’s vote for him 
in the Institutional Investor poll, by responding in an email: “[I]t’s how we get ‘paid,’ so thanks 
very much.”  This evaluation and compensation structure created a risk that DBSI equity research 
analysts would share their potentially market-moving nonpublic views about covered companies 
with DBSI customers. 
 
11. Many institutional investors rate research analysts and other “sell side” broker-
dealer personnel by assigning “broker votes” to those whom they want to reward for good service, 
and then allocate their trading, and resulting commissions, to the firms whose personnel they have 
rated the most highly.  DBSI research analysts were aware of the importance that DBSI placed on 
broker votes and investor surveys.  For example, in early March 2012, DBSI held an equity 
research analyst meeting to emphasize to DBSI’s research analysts and sales personnel the 
importance of Institutional Investor votes to DBSI.  Slides used during the meeting, and 
subsequently distributed to DBSI’s analysts, described a campaign that DBSI intended to conduct 
to generate Institutional Investor votes for the firm and its employees with the goal of becoming a 
top five bank in Institutional Investor voting.   
 
B.  DBSI Failed to Establish, Maintain, and Enforce Policies and Procedures That Were 
Reasonably Designed to Prevent DBSI Equity Research Analysts from Disclosing 
Material, Nonpublic Information Regarding, Among Other Things, Their Views and 
Analyses of Covered Companies 
 
12. During the relevant period, DBSI’s policies and procedures governing the conduct 
of its equity research department were primarily set forth in two documents: (1) “Research Policies 
and Procedures Manual – Markets US” (“Research Manual”) and (2) the “Research Integrity and 
Cross-Divisional Interactions Policy – Corporate and Investment Bank” (“CIB”).  These documents 
included, in some instances, overlapping policies and procedures.  During the relevant period, DBSI 
equity research analysts also received training on the firm’s policies and procedures, including 
                                                 
3
  NASD Rule 2711(d)(2), which was in effect during the relevant period, required broker dealers to consider, 
among other things, “the overall ratings received from clients, sales force, and peers independent of the member’s 
investment banking department, and other independent ratings services” in determining the compensation of their 
research analysts.  The rule did not, however, prescribe the relative weight that a firm ought to assign to any of the 
factors.  
 

  
 
 5 
during mandatory annual compliance trainings for equity research personnel, and also received 
training and email alerts regarding emerging compliance issues.   
 
i. Analysts’ Views and Analyses Intended for Publication in Forthcoming DBSI 
Research Reports and Estimate Changes of Less Than Ten Percent 
 
13. DBSI’s policies and procedures required the broad public dissemination of all DBSI 
research reports.  To ensure simultaneous public dissemination, DBSI’s policies and procedures 
generally prohibited equity research analysts from sharing forthcoming research, deemed “research 
in process,” with anyone outside of the firm’s equity research department.  DBSI’s policies and 
procedures also required equity research analysts to publish a research report before sharing a 
“change in view, recommendation, rating, price target or estimate” with select DBSI customers and 
DBSI sales and trading personnel.  These policies and procedures, which were designed to prevent 
the misuse of material, nonpublic information generated by DBSI’s equity research analysts, were 
not reasonably designed in two key respects. 
 
14. DBSI’s written policies and procedures stated that “research in process” includes 
two periods (1) “the time frame beginning the moment an analyst begins drafting a report and 
ending when the report is published,” as well as (2) an “earlier time period ... beginning when an 
analyst has definitely decided to publish a report and has a developed thesis for that report.”  This 
policy, however, was susceptible to differing interpretations.
4
   
 
15. For example, DBSI compliance and equity research personnel who were 
responsible for providing guidance and training to analysts and others on DBSI’s policies and 
procedures believed that “research in process” did not exist until an equity research analyst had a 
developed thesis for a forthcoming research report, regardless of whether the analyst or the 
analyst’s team had decided to publish a research report or even begun drafting a research report, as 
stated in the first prong of DBSI’s written policy.  Similarly, a senior equity research analyst 
(“Analyst A”) claimed that because he had not yet developed an investment thesis following a non-
deal road show, his team did not have “research in process” even after he had directed a junior 
analyst who reported to him to begin drafting a research report that they intended to publish two 
days later.  In the meantime, Analyst A proceeded to speak with DBSI customers regarding his 
materially changed views of the issuer.   
 
16. DBSI’s policies and procedures stated that analysts “must safeguard research in 
process” and that research in process “must not be shared with clients or potential clients (external 
or internal) prior to publishing.”  DBSI’s policies and procedures also directed equity research 
analysts to “take steps to ensure that the contents of a pending research report cannot be viewed by 
those outside of the research department,” and DBSI had established other controls to address these 
risks, such as restricting access to the floor where fundamental equity analysts worked and 
maintaining a policy that prohibited all “market-sensitive research reports” from being written on 
                                                 
4
  Under DBSI’s policies and procedures, DBSI equity research personnel were directed to contact DBSI’s 
Legal and Compliance departments for guidance “should there be any question concerning whether there is 
‘research in process.’” 
 

  
 
 6 
the sales and trading floor.  However, these policies and procedures did not address the ambiguity 
in DBSI’s definition of “research in process.” 
  
17. At the same time, however, DBSI’s policies and procedures permitted equity 
research analysts to communicate with DBSI customers and DBSI sales and trading personnel 
about companies that were the subjects of research in process if the communications “did not 
reflect or signal a material change from the analyst’s prior published view.”   
 
18. DBSI’s policies and procedures did not adequately define what constituted a 
“material change.”  DBSI also failed to provide adequate guidance and training to its equity 
research analysts regarding what constituted “a material change from the analyst’s prior published 
view.”   For example, under DBSI’s written policies and procedures, an analyst’s rating or price 
target change was deemed to be always material, but an estimate change by an equity analyst was 
considered material only when the change was greater than ten percent.
5
  Furthermore, DBSI 
equity research and compliance personnel applied the ten percent threshold based solely on 
changes in an analyst’s annual, not quarterly, estimates.  Thus, DBSI policies and procedures 
permitted equity analysts to disclose to customers other than in published research reports greater 
than ten percent changes in quarterly estimates, as long as such changes did not also result in a 
greater than ten percent change in their annual estimates.  
 
19.   An equity analyst’s change of ten percent or less in estimates of annual or quarterly 
corporate financial performance – particularly when the analyst is highly regarded – can be, and 
often is, highly relevant and material to investors.
6
 
 
20. Accordingly, by adopting a threshold of ten percent for materiality with regard to 
analyst estimate changes, and limiting the policy only to changes in annual estimates, DBSI created 
a risk that analysts would disclose to certain customers material, nonpublic information regarding 
changes to annual and quarterly estimates without first publishing such information in research 
reports. 
 
                                                 
5
   In contrast to the unqualified statements contained in the firm’s written policies that analyst’s price target 
changes always were material, DBSI’s Supervisory Analyst Handbook, which governed the conduct of DBSI equity 
research personnel responsible for reviewing and approving DBSI research reports, specified that only changes to 
price targets of ten percent or greater were required to be published in research reports.  Moreover, DBSI’s policies 
concerning communications between equity research personnel and investment banking personnel provided that 
“analysts may never provide Banking (or any other party) with an advance notification of a pending rating, price 
target, or estimate change.”  (Emphases added.)  This policy did not condition the restriction on whether an estimate 
change was material or greater than ten percent.   
 
6
  The materiality standard applied by the courts to Section 10(b) and Rule 10b-5 of the Exchange Act, a 
principal antifraud provision of the federal securities laws applies in the context of Section 15(g).  Information is 
deemed material if there is a substantial likelihood that a reasonable investor would consider it important in making an 
investment decision.  Basic Inc. v. Levinson, 485 U.S. 224, 231-232 (1988), citing TSC Industries, Inc. v. Northway, 
426 U.S. 438, 449 (1976).  An omitted fact is material if there is a substantial likelihood that the disclosure of that fact 
would have been viewed by a reasonable investor as having significantly altered the total mix of information made 
available.  Id.   
  

  
 
 7 
21. DBSI’s policies and procedures did not specify what other types of pre-publication 
information, apart from ratings, price targets, and certain estimate changes, was deemed to be 
material, and therefore, could only be disclosed in a published research report. 
 
22. As a result of these weaknesses in its policies and procedures, DBSI failed to prevent 
the disclosure of potentially market sensitive information that was to be included in forthcoming 
DBSI research reports and analysts’ estimate changes of ten percent or less.  For example:  
 
a. On February 2, 2012, a DBSI senior equity research analyst (“Analyst B”) 
published a research report on Company A.  In the report, Analyst B estimated that the 
company’s 2012 first quarter earnings before interest, taxes, depreciation, and amortization 
(“EBITDA”)
7
 would be $850.6 million, which included a first quarter EBITDA of $430.9 
million for a region of Company A’s business (“Region A”).  Approximately two months 
later, on April 9, 2012, the Analyst B told certain DBSI customers and DBSI sales and 
trading personnel that he expected Company A’s first quarter EBITDA to be higher than his 
previously published estimate, explaining that he had calculated a first quarter EBITDA of 
$490 million for Region A.  This change in the analyst’s Region A estimate represented a 
13.7% increase from his earlier estimate for Region A and a 6.9% increase from his earlier 
estimate for Company A in total.  Ten days later, on April 19, 2012, the Analyst B published 
another research report on Company A, in which he raised his estimate of Company A’s 
first quarter EBITDA to $906 million, based largely on an increase in his estimate for 
Region A’s first quarter EBITDA to $479.5 million. 
 
b. On February 21, 2012, Analyst B published a research report on Company 
B.  In the report, Analyst B estimated that the company’s 2012 first quarter EBIDTA would 
be $125.7 million.  Two months later, on April 23, 2012, the day before Company B was 
scheduled to release its 2012 first quarter earnings, the analyst told certain DBSI customers 
that he expected Company B’s first quarter EBITDA to be as high as $139 million, which 
was a 10.6% increase from his earlier estimate.  The next day, the analyst emailed a DBSI 
salesperson stating that even a first quarter EBITDA of $134 for Company B was a 
“meaningful beat.”  Analyst B never issued a research report with the revised estimate for 
Company B. 
 
c. On March 28, 2012, Analyst A hosted a non-deal road show for Company 
C.
8
  Beginning at about 7:30 a.m. and continuing until about 3:15 p.m., the company’s 
executives met privately with DBSI customers.  Analyst A attended all of these meetings.  
Shortly after the meetings had ended, Analyst A contacted certain DBSI customers, 
sharing his impressions from the meetings and his view of the company’s prospects for 
the quarter.  That night, Analyst A sent an email to the head of DBSI’s Institutional 
Client Group for North America, stating that he had a “note hitting in the a.m. [that] will 
likely rattle the stock.”  The following morning, March 29, 2012, Analyst A published a 
                                                 
7
  EBIDTA is used by some research analysts as a measure of a company’s profitability. 
 
8
  A non-deal road show is a series of meetings between company management and representatives of 
institutional investors, typically hosted by a broker-dealer, during which the participants discuss the performance and 
future prospects of the company, but no securities are offered for sale.     

  
 
 8 
research report on Company C that contained information that was substantially the same 
as the information that he had conveyed to at least one of the DBSI customers with whom 
he spoke the day before, as reflected in notes that were taken by that particular DBSI 
customer.  
 
d. In an instant message to a junior equity research analyst sent on April 4, 
2012, Analyst A described his practice of previewing his forthcoming research for certain 
customers.  After the junior analyst had asked Analyst A whether he was going to issue a 
research report following a meeting that the senior analyst had hosted between the 
management of a company that he covered and certain DBSI customers, Analyst A 
responded that he would not publish immediately, and explained that he usually waited two 
days following such a meeting before publishing a report because it “give[s] clients the 
opportunity to trade on what they lea[rned] and more importantly allows me to talk about it 
before telling the world.”  The junior analyst replied, “understood and makes sense.” 
 
ii. Unpublished Short Term Trade Recommendations That Were Inconsistent 
With An Analyst’s Long Term Published Ratings  
 
23. In addition to publishing long term ratings based on their twelve-month view of a 
stock, DBSI’s equity research analysts also were permitted to publish short term trade ideas on 
DBSI’s SOLAR website.  DBSI’s policies and procedures expressly stated that SOLAR was “the 
only setting wherein an analyst may express a short term trade idea.”  DBSI’s policies and 
procedures prohibited equity research analysts from selectively disclosing any trading 
recommendation that was contrary to their long term published ratings.  Similarly, all DBSI 
research reports issued during the relevant period included the following standard disclosure 
regarding short term trade ideas:  “Deutsche Bank equity research analysts sometimes have 
shorter-term trade ideas (known as SOLAR ideas) that are consistent or inconsistent with Deutsche 
Bank’s existing longer term ratings.  These trade ideas can be found at the SOLAR link at 
http://gm.db.com.”  In addition, DBSI’s policies and procedures stated that pending SOLAR ideas 
must be treated as material, nonpublic information, and accordingly, all DBSI customers had to 
have equal access to them.
9
   
 
24. DBSI’s policies and procedures with regard to short term trade ideas were not 
reasonably designed because they failed to clearly define what constituted a “short term trade 
idea.”  Indeed, DBSI’s public disclosures on the SOLAR website and in blast emails sent to 
DBSI customers announcing new SOLAR ideas were inconsistent with DBSI’s policies and 
procedures.
10
  The SOLAR website and the blast emails stated that SOLAR ideas were limited to 
short term trade ideas that an analyst believed would be valid for at least two weeks.  The 
disclosure stated, in pertinent part, that: “Analyst believes the stock will out [or under] perform 
                                                 
9
 The firm’s training materials during the relevant period reiterated these concepts.  For example, the slides 
for an annual compliance training for research analysts in 2011 included the following guidance: “Never Write or 
Say Anything Contrary to Your Published Investment View,” “Never Contradict Published Investment View Even If 
You Are Not the Lead Analyst,” “Never Traffic In Material Nonpublic Information,” and “Use SOLAR to Express 
All Short Term Trade Ideas.” 
 
10
  They also were inconsistent with the public disclosure made in all DBSI research reports issued during the 
relevant period that short term trade ideas could be found on the SOLAR website.   

  
 
 9 
the market and/or sector delineated over a time frame of no less than 2 weeks with a high to 
moderate [or moderate to low] return to risk profile.”  (Emphasis added).  However, DBSI’s 
policies and procedures failed to address the risk that in disseminating short term trade ideas of 
less than two weeks conviction, which were not required to be published on the SOLAR website, 
research analysts could divulge material, nonpublic information regarding changes in their views 
of a company and provide trade ideas that ran counter to their published long term ratings, in 
violation of DBSI’s policies and procedures.  
 
25. As a result of these weaknesses in its policies and procedures, DBSI failed to prevent 
research analysts from disclosing short term trade ideas that were not published in SOLAR, some of 
which were inconsistent with the analyst’s published long term rating, in communications with 
DBSI customers and DBSI sales and trading personnel.  For example:      
 
a. In a May 3, 2012 instant message, Analyst A told DBSI’s head trader 
responsible for trading consumer stocks to “short” a stock for which the analyst had a 
published HOLD rating.  Similarly, in an October 10, 2012 email to DBSI sales and 
trading personnel, which he copied to three junior equity research analysts who reported 
to him at the time, the same analyst recommended a “buy” for a stock for which he had a 
published HOLD rating.   
   
b. In an April 24, 2012 instant message, Analyst B told a DBSI customer to 
“get out” and “puke” a stock for which he had a published HOLD rating.  Similarly, in a 
May 20, 2012 email, Analyst B told another DBSI customer to “short” a different stock for 
which the analyst had a published HOLD rating.  
 
C. DBSI Failed to Establish, Maintain, and Enforce Reasonable Policies and 
Procedures For Communications Between DBSI Equity Research Analysts and 
DBSI Customers and DBSI Sales and Trading Personnel 
 
26. DBSI's failure to establish, maintain, and enforce  policies and procedures 
reasonably designed to prevent its equity research analysts from disclosing material, nonpublic 
information was further amplified by shortcomings in its policies and procedures pertaining to 
communications between DBSI’s equity research analysts and both DBSI customers and DBSI 
sales and trading personnel.  In particular, DBSI failed to establish, maintain, and enforce 
reasonable policies and procedures to prevent its equity research analysts from using various 
customer interactions and internal communications with DBSI sales and trading personnel, 
including, but not limited to, morning calls, squawks, idea dinners, and non-deal road shows to 
disclose potentially market sensitive information to DBSI customers and DBSI sales and trading 
personnel.  These deficiencies created a risk that material, nonpublic information generated by 
DBSI equity research analysts might be misused. 
  
i. Morning Calls and Squawks 
 
27. For most days the stock market was open, DBSI held a premarket internal “morning 
call” during which DBSI equity research analysts provided information and recommendations to the 
DBSI sales staff on the companies and stocks that they covered.  During the day, DBSI research 

  
 
 10 
analysts also communicated breaking news and recommendations on the companies and stocks that 
they covered to the DBSI sales staff over an internal intercom system known as a “squawk box.”  
DBSI asserts that it had an unwritten policy of allowing research analysts to speak on morning calls 
generally if they were discussing only recently-published research.  Similarly, DBSI asserts that 
research analysts were only permitted to speak on the squawk box if they were discussing recently-
published research or responding to publicly-available information, such as breaking market news, 
earnings, or a corporate event.  Nevertheless, at various times, morning calls and squawks were not 
monitored or were inadequately monitored and remarks made by analysts that went beyond that 
which was permitted were not subjected to follow-up by compliance personnel or supervisory 
analysts.
11
  
 
28. DBSI sales personnel were permitted to share the information and recommendations 
that they learned during these morning calls and over the squawk box with DBSI customers.  This 
created a risk that DBSI equity research analysts could disclose unpublished market sensitive 
information during morning calls and squawks, which DBSI sales personnel in turn could relay to 
external and internal customers.  DBSI failed to establish, maintain, and enforce policies and 
procedures reasonably designed to address the risk that research analyst participation in morning 
calls and squawks could result in the disclosure of material, nonpublic information.   
 
29. Prior to the time, in early 2013, when DBSI became aware of the Commission 
staff’s investigation, DBSI lacked policies and procedures reasonably designed to prevent the 
disclosure of potentially material, nonpublic information with regard to morning calls and 
squawks.  For example, compliance personnel did not regularly monitor the information that 
research analysts and others shared during morning calls and over the squawk box, and DBSI 
compliance did not maintain any record of the information that research analysts shared during 
their squawks.  Consequently, hundreds of morning calls and squawks were conducted without any 
oversight from DBSI compliance personnel or supervisory analysts. 
 
30. Moreover, during the relevant period, DBSI failed to enforce even the limited 
policies and procedures that the firm had established pertaining to morning calls and the squawk 
box.  For example, with respect to squawks, DBSI’s policies and procedures required that to 
“relay information intraday [on the squawk box] (including rating, estimate, or price target 
changes and newsworthy items), Analysts must contact the Equity Focus Group prior to 
publication of [research reports], and should email the main points to the Equity Focus Group.”  
However, DBSI equity research analysts regularly failed to email their main points to the Equity 
Focus Group, but nonetheless, were still permitted to relay information on the squawk box.  
Similarly, with respect to morning calls, DBSI’s policies and procedures prohibited equity 
research analysts who had not very recently published a research report from commenting during 
morning calls without first having contacted the Equity Focus Group to preview their planned 
comments.  However, this procedure was seldom followed.  The head of DBSI’s Equity Focus 
Group acknowledged that this procedure “did not reflect how it actually happens.”   
                                                 
11
  Personnel from DBSI’s Equity Focus Group, which is a group within DBSI’s research department, organized 
and hosted the morning calls and squawks.  Although the Equity Focus Group was not part of DBSI’s compliance 
department, it had established controls over the morning meetings and squawks, such as controlling which particular 
analysts could provide commentary and retaining the ability to cut off an analyst if any commentary was inappropriate. 
 

  
 
 11 
 
31. As a result of these deficiencies, DBSI failed to prevent the disclosure of potentially 
market sensitive information during morning calls and over the squawk box.  For example:   
 
a. On March 22, 2012, Analyst C spoke about Company D during a morning 
call, after he had published a research report on the company earlier that morning in 
which the analyst had upgraded his rating for its stock from a HOLD to a BUY and 
increased his price target for the stock to $100.  During the morning call, Analyst C stated 
his view that, assuming Company D had fifteen percent earnings per share growth for 
2013, the company was a “$110 to $115 stock.”  A week later, on March 28, 2012, 
Analyst C spoke about Company D during another morning call, having published a 
research report on the company earlier that morning.  The analyst once again gave an 
estimated future price of the stock that was above his published $100 price target: “My 
price target is $100 right now just cause I haven’t revised the model ahead of the 
[company’s fourth quarter earnings] call.  But I can, as I said last week, I can get to a 
midterm target of $110 or even a little higher.”  Analyst C never published a research 
report containing his midterm price target of at least $110.   There is no record that DBSI 
compliance or research supervisors noted this statement or took any corrective measures 
with regard to Analyst C.  
 
b. On March 29, 2012, Analyst A spoke about Company C during a morning 
call, having published a research report on the company earlier that morning that had 
maintained both his BUY rating and price target.  During the morning call, Analyst A 
explained that he had maintained his BUY rating because “obviously we just had them in 
town so it’s not kosher to downgrade on the heels of something like that.”  Analyst A also 
said, “[B]ut more importantly than that, I think there’s obviously time left in the quarter” 
and that he and his team were “gonna do our homework on it” and “gonna be in front of 
‘em.”  Less than a month later, on April 24, 2012, the morning after Company C had 
issued an unexpected press release forecasting negative first quarter comparable store 
sales, which resulted in the company’s stock losing almost one-quarter of its value in one 
day, Analyst A spoke about Company C on another morning call.  After discussing the 
company’s disappointing first quarter sales figures, he stated: “[F]ortunately, we told 
many clients a few weeks back to sell the stock....  I think the writing was on the wall 
[that] we were getting concerned about it, but I was trying to maintain, you know, my 
relationship with them.  So that’s why we didn’t downgrade it a couple weeks back.”  
 
c. On April 10, 2012, Analyst A spoke about Company E on the squawk box 
shortly after the company had announced its fourth quarter earnings.  Later that same day, 
the analyst issued a research report on Company E.  The report included substantially the 
same information that the analyst had shared in his earlier squawk, as shown below.    
 
DBSI Sales Employee’s Notes of 
Squawk   
April 10, 2012 Research 
Report 
Going to get a relief rally here. Relief Rally on Tap 
Looking at their guidance, we 
simply do not think it’s achievable. 
Guidance Looks Optimistic, In 
Our View  

  
 
 12 
Very curious as to why they’ve put 
out such high expectations.  Net net 
we don’t think they’ll be able to 
deliver.   
[Company E] would have been 
better served giving more 
conservative guidance. 
Comp is a little better ID’s [identical store sales]-
Better-Than-Expected 
Staying on the sidelines. Net, we remain comfortably 
uninvolved (i.e., HOLD rating). 
 
ii. Idea Dinners 
 
32. Consistent with DBSI’s practice of encouraging its equity research analysts to 
interact with DBSI customers, DBSI research analysts were permitted to participate in “idea 
dinners” hosted by the firm.  Idea dinners
12
 presented another opportunity for equity research 
analysts to discuss the public companies and stocks they covered with DBSI customers in an 
informal setting.  Under the typical format, DBSI equity research analysts as well as DBSI 
customers were expected to share at least one buy or sell investment idea.  The idea dinners created 
a heightened risk that DBSI equity research analysts could disclose material, nonpublic 
information to selected customers, in order to receive positive assessments, such as Institutional 
Investor votes, from those DBSI customers for the analysts’ annual evaluations by DBSI.  DBSI 
failed to take reasonable steps to prevent material, nonpublic information from being disclosed at 
these dinners. 
 
33. DBSI failed to monitor whether its equity research analysts were violating DBSI’s 
policies and procedures at idea dinners, by, for example, offering trade recommendations that were 
inconsistent with their published long term ratings.  DBSI had no policies and procedures and no 
formal trainings specifically related to such dinners.  Moreover, DBSI compliance personnel did not 
attend idea dinners nor did they preview or subsequently review the trade ideas shared during 
these dinners.  DBSI also did not maintain any record of the investment ideas shared at idea 
dinners.   
 
34. As a result of these deficiencies, DBSI failed to prevent the disclosure of short term 
trade ideas that were not published on SOLAR and were inconsistent with analysts’ published 
ratings.  For example, at an April 26, 2012 idea dinner hosted by DBSI, which was attended by 
approximately ten DBSI customers, a DBSI junior equity research analyst who attended together 
with Analyst A shared two trade recommendations for companies that he covered along with 
Analyst A that were inconsistent with their published HOLD ratings. 
 
iii DBSI Customer - Issuer Meetings Conducted by DBSI Research Analysts 
 
35. DBSI also encouraged its equity research analysts to interact with DBSI 
customers by, among other things, organizing or hosting events such as non-deal road shows, 
company tours, and other similar issuer/customer meetings, which provided DBSI customers an 
opportunity to meet directly and interact with management of the companies covered by DBSI 
                                                 
12
  Occasionally, these events were held during lunches, but for ease of reference, all are referred to 
collectively as idea dinners herein. 

  
 
 13 
analysts.  DBSI research analysts that hosted such events often issued research reports on the 
companies shortly after the events.  The reports typically included the analyst’s key impressions 
from the meetings.  Under these circumstances, there was a heightened risk that, during the 
period after the event until the publication of a report by the hosting analyst, an analyst could 
disclose material, nonpublic information regarding the analyst’s views of the company as a result 
of information learned or impressions formed during the event that later would appear in a 
published research report.  DBSI also lacked policies and procedures reasonably designed to 
determine whether DBSI equity research personnel who attended the events with company 
management were divulging or acting upon material, nonpublic information obtained from 
company management. 
   
36. Despite these risks, DBSI failed to establish, maintain, and enforce policies and 
procedures reasonably designed to prevent its equity research analysts from disclosing material, 
nonpublic information to certain DBSI customers and DBSI sales and trading personnel 
following these events and prior to the publication of research reports that contained information 
that the analyst may have learned and views that the analyst may have formed during these 
events.  DBSI had no policies and procedures that addressed these events, apart from a prohibition 
against DBSI research and investment banking personnel jointly attending or organizing non-deal 
road shows.  DBSI did not provide any specific training for its analysts related to these events or on 
how to conduct customer contacts subsequent to these events.  DBSI compliance personnel did not 
attend or monitor these events or chaperone the analysts’ contact with customers immediately after 
these events and prior to the publication of post-event research reports.   
 
37. As a result, on several occasions during the relevant period, DBSI failed to prevent 
equity research analysts from disclosing nonpublic market sensitive information that they had 
learned or developed during these issuer/customer events to certain DBSI customers and DBSI sales 
and trading personnel before the same information appeared in DBSI research reports.  For 
example:   
 
a. As discussed above, on March 28, 2012, Analyst A disclosed the substance 
of his forthcoming research report on Company C to certain DBSI customers immediately 
after hosting a non-deal road show for the company.    
 
b. On April 3, 2012, Analyst A hosted ten DBSI customers for a 
headquarters trip to Company F.  Beginning at approximately 2:00 p.m., Analyst A and 
DBSI customers met privately with Company F management.  Early the next morning, 
Analyst A emailed his impressions from the trip to select DBSI customers and DBSI 
sales and trading personnel.  The subject line of his emails varied for different DBSI 
customers, ranging from “these are full notes” to “some good color for you today ... get 
long brotha.”  In the email, the analyst emphasized that in his opinion Company F 
“sounded rock solid.”  One DBSI customer who received the email thanked Analyst A 
for his “great summary.”  Later that same day, the junior equity research analyst who was 
working on an initial draft of the forthcoming Company F research report emailed 
Analyst A that he had emphasized points from Analyst A’s email in his draft of the 
research report.  On April 9, 2012, Analyst A published a research report on Company F 

  
 
 14 
that increased his price target from $49 to $52 and contained information that was 
substantially the same as the information that he had conveyed in his April 4, 2012 email. 
  
D. DBSI Issued a Research Report by a Senior Equity Research Analyst That Was 
Inconsistent With His Personally Held View 
 
38. On March 29, 2012, DBSI issued a research report by Charles P. Grom, a DBSI 
senior equity research analyst, on Big Lots, Inc., in which Grom reiterated his BUY rating.  As 
required by Regulation AC, Grom signed an analyst certification that was included at the end of 
the report, which stated: “The views expressed in this report accurately reflect the personal views 
of the undersigned lead analyst(s) about the subject issuer and the securities of the issuer.”  In 
fact, however, his BUY rating was inconsistent with his personal view that the company should 
have been downgraded.  As discussed above, during a morning call with DBSI’s sales and trading 
staff on the day that his research report was published, as well as on at least two subsequent 
occasions, Grom stated that he wanted to, but did not, downgrade Big Lots in order to maintain 
his relationship with its management.  Grom subsequently repeatedly stated that at about the time 
that he had published the report in question, he had told certain DBSI customers to sell Big Lots 
stock, notwithstanding his published BUY rating.
13
     
 
E. DBSI Failed to Timely Produce and Preserve Internal DB Chat Communications   
 
39. In early 2015, during the course of the Commission staff’s investigation into 
DBSI’s policies and procedures, DBSI discovered a problem with the software responsible for 
preserving electronic communications sent and received through DBSI’s internal “DB Chat” 
messaging system.  DBSI personnel, including equity research personnel, used DB Chat to 
conduct DBSI business.  Indeed, DBSI’s policies and procedures specifically stated that the DB 
Chat system was “for business use only.”   
 
40. After discovering the problem, DBSI was able to recover a substantial amount of 
the DB Chat communications sent and received by DBSI equity research personnel during the 
relevant period, although it could not represent that it had recovered all of the called-for 
communications.  Accordingly, DBSI failed to preserve for three years and preserve in an 
accessible place for two years certain internal DB Chat communications.  DBSI also failed to 
promptly furnish copies of certain DB Chat communications that had been requested by the staff 
during the investigation. 
 
 
 
 
                                                 
13
  On February 17, 2016, the Commission instituted a settled public administrative and cease-and-desist 
proceeding against Grom for violating Rule 501 of Regulation AC.  See In re Charles P. Grom, Exchange Act Rel. 
No. 77150 (February 17, 2016).  Without admitting or denying the Commission’s findings, Grom consented to the 
entry of the Commission’s order and agreed to pay a $100,000 civil penalty and to be suspended from the securities 
industry for a year.  
  

  
 
 15 
LEGAL ANALYSIS 
 
A. Section 15(g) of the Exchange Act  
 
41.  Section 15(g) of the Exchange Act requires registered broker-dealers to establish, 
maintain and enforce written policies and procedures, reasonably designed, taking into 
consideration the nature of the broker-dealer’s business, to prevent the misuse, in violation of the 
Exchange Act or the rules and regulations thereunder, of material, nonpublic information by such 
broker or dealer or any person associated with such broker or dealer.
14
  The internal controls 
requirements imposed by Section 15(g) are essential to protect against the risk of misuse of 
material, nonpublic information, which can undermine investor confidence in the integrity of the 
markets.  Section 15(g) is intended to guard against a broad range of potential market violations, 
including insider trading and trading in advance of material research changes.  See 143 Cong. Rec. 
E3078-04, 1988 WL 180248 (Sept. 13, 1988) (stating that “misuse of material, nonpublic 
information” as used within Section 15(f) was intended to include a broad range of market 
abuses, such as insider trading, scalping, and front running).   
 
42. Broker-dealers must be cognizant of their duties under Section 15(g) and the need to 
tailor their policies and procedures to the specific activities of the individual firm, particularly as 
their businesses evolve.  The Commission consistently has made clear that the requirement that 
broker-dealers implement and maintain policies and procedures consistent with the nature of its 
business “is critical to effectively preventing the misuse of material, nonpublic information.”  In 
re Gabelli & Co., Inc., Exchange Act Rel. No. 35057 (Dec. 8, 1994).  The Commission also has 
consistently made clear that broker-dealers must take seriously their responsibilities to design 
and enforce sufficiently robust policies and procedures to prevent the misuse of material, 
nonpublic information.  See, e.g., In re Goldman, Sachs & Co., Exchange Act Rel. No. 66791 
(April 12, 2012) (finding Section 15(g) violation where Goldman Sachs had not established, 
maintained, and enforced adequate policies and procedures concerning its trading “huddle” 
program); In re Merrill Lynch, Pierce, Fenner & Smith, Inc., Exchange Act Rel. No. 59555 (March 
11, 2009) (finding Section 15(f) violation where Merrill Lynch failed to limit or monitor traders’ 
access to the equity squawk box which broadcast material nonpublic information); In re Banc of 
America Securities LLC, Exchange Act Rel. No. 55466 (March 14, 2007) (finding Section 15(f) 
violation where Banc of America failed to establish, maintain, and enforce policies and procedures 
to protect against the misuse of material nonpublic research information).  The mere establishment 
of policies and procedures alone is not sufficient to prevent the misuse of material, nonpublic 
information.  It also is necessary to implement measures to monitor compliance with and 
enforcement of those policies and procedures.  See, e.g., In re Monness, Crespi, Hardt & Co., Inc., 
Exchange Act Rel. No. 72886 (August 20 2014) (finding Section 15(g) violation where Monness 
failed to enforce existing policies and procedures designed to protect against the misuse of 
material, nonpublic information); In re Morgan Stanley & Co. Inc., et al., Exchange Act Rel. No. 
54047 (June 27, 2006) (finding Section 15(f) violation where Morgan Stanley failed to enforce 
existing policies and procedures concerning surveillance over a four-year period).  These 
obligations are important even if no questionable trading has occurred. 
 
                                                 
14
  Section 15(g) of the Exchange Act was formerly Section 15(f) of the Exchange Act.  The provision was 
renumbered in 2010 by the Dodd-Frank Wall Street Reform and Consumer Protection Act. 

  
 
 16 
43. DBSI’s policies and procedures were not reasonably designed, given the nature of 
its business, to prevent the misuse of material, nonpublic information generated by its equity 
research analysts.  DBSI failed to establish clear and consistent policies and procedures to prevent 
its equity research analysts from disclosing material, nonpublic information, such as information 
that was to be included in forthcoming DBSI research reports, estimate changes of less than ten 
percent, and short term trading recommendations that were inconsistent with the analyst’s published 
long term ratings.  These failures were further compounded by deficiencies in DBSI’s policies and 
procedures pertaining to communications between DBSI’s equity research analysts and both DBSI 
customers and DBSI sales and trading personnel.  In particular, DBSI failed to establish, maintain, 
and enforce policies and procedures reasonably designed  to prevent its equity research analysts 
from using various customer interactions and internal communications with DBSI sales and trading 
personnel, including, but not limited to, morning calls, squawks, idea dinners, and non-deal road 
shows to disclose material, nonpublic information in the form of unpublished market sensitive 
information to select DBSI customers and DBSI sales and trading personnel.  These failures are 
amplified in light of a compensation structure that heightened the potential for the selective 
disclosure and misuse of material, nonpublic information generated by DBSI equity research 
analysts.  Nonetheless, despite these risks, DBSI failed to establish, maintain, and enforce policies 
and procedures reasonably designed to prevent its equity research analysts from disclosing to firm 
customers, either directly or indirectly through DBSI sales and trading personnel, material, 
nonpublic information. 
 
44. As a result of the conduct described above, DBSI willfully
15
 violated Section 15(g) 
of the Exchange Act.
16
 
 
B. Rule 501 of Regulation AC 
 
45. Rule 501 of Regulation AC requires that brokers, dealers, and certain persons 
associated with a broker or dealer, including research analysts, include in their research reports a 
prominent certification by the research analyst that the views expressed in the research report 
accurately reflect the research analyst’s personal views about any and all of the subject securities 
or issuers.  On March 29, 2012, DBSI issued a research report by Grom on Big Lots in which 
Grom reiterated his BUY rating.  Grom signed the Regulation AC certification for this research 
report.  However, as described above, Grom believed he should have downgraded Big Lots in his 
March 29, 2012, research report and repeatedly stated that he did not downgrade Big Lots at the 
time because he wanted to maintain his relationship with its management.  Accordingly, Grom’s 
March 29, 2012, research report did not accurately reflect his personally held view.   
 
                                                 
15
  A willful violation of the securities laws means merely “‘that the person charged with the duty knows what 
he is doing.’” Wonsover v. SEC, 205 F.3d 408, 414 (D.C. Cir. 2000) (quoting Hughes v. SEC, 174 F.2d 969, 977 
(D.C. Cir. 1949)). There is no requirement that the actor “‘also be aware that he is violating one of the Rules or 
Acts.’” Id. (quoting Gearhart & Otis, Inc. v. SEC, 348 F.2d 798, 803 (D.C. Cir. 1965)). 
 
16
  There is no requirement under Section 15(g) of the Exchange Act that there be an underlying insider 
trading violation or any other violation of the Exchange Act or the rules thereunder.  See In the Matter of New York 
Stock Exchange LLC, et al., Exchange Act Release No. 72065, 2014 WL 1712113, at *5 fn. 13 (May 1, 2014); In the 
Matter of Certain Market Making Activities on NASDAQ, Exchange Act Release No. 40910, 1999 WL 6716, at *6 
fn. 3 (Jan. 11, 1999). 

  
 
 17 
46. As a result of the conduct described above, DBSI willfully violated Rule 501 of 
Regulation AC. 
 
C. Section 17(a) of the Exchange Act and Rule 17a-4 Thereunder 
 
47. Section 17(a)(1) of the Exchange Act requires that broker-dealers “shall make and 
keep for prescribed periods such records, furnish such copies thereof, and make and disseminate 
such reports as the Commission, by rule, prescribes as necessary or appropriate in the public 
interest, for the protection of investors, or otherwise in furtherance of the purposes of this 
chapter.”  The Commission has emphasized the importance of the records required by the rules 
as “the basic source documents” of a broker-dealer.  Statement Regarding the Maintenance of 
Current Books and Records by Brokers and Dealers, 4 SEC Docket 195 (April 6, 1974).  The 
record keeping rules are “a keystone of the surveillance of broker and dealers by [Commission] 
staff and by the securities industry's self-regulatory bodies.”  Edward J. Mawod & Co., 46 S.E.C. 
865, 873 n.39 (1977) (citation omitted), aff'd, 591 F.2d 588 (10th Cir. 1979).  Rule 17a-4(b)(4) 
of the Exchange Act requires each broker-dealer to ‘preserve for a period of not less than three 
years, the first two years in an accessible place.... [o]riginals of all communications received and 
copies of all communications sent . . . by the ... broker or dealer (including inter-office 
memoranda and communications) relating to its business as such.”  Rule 17a-4(j) of the 
Exchange Act requires broker-dealers to “furnish promptly to a representative of the 
Commission legible, true, complete, and current copies of those records of the . . . broker or 
dealer that are required to be preserved under this section ... that are requested by the 
representative of the Commission.” 
  
48. DBSI failed to preserve for three years and preserve in an accessible place for two 
years certain internal DB Chat communications.  In addition, DBSI failed to promptly furnish 
copies of all DB Chat communications that had been requested by the staff during the 
investigation.    
 
49. As a result of the conduct described above, DBSI willfully violated Section 17(a) of 
the Exchange Act and Rule 17a-4 thereunder. 
 
REMEDIAL EFFORTS 
 
50. In determining to accept the Offer, the Commission considered remedial acts 
taken by DBSI. 
   
IV. 
 
 In view of the foregoing, the Commission deems it appropriate and in the public interest to 
impose the sanctions agreed to in Respondent’s Offer. 
 
 Accordingly, pursuant to Sections 15(b) and 21C of the Exchange Act and Section 203(e) 
of the Advisers Act, it is hereby ORDERED that: 
 

  
 
 18 
A. Respondent shall cease and desist from committing or causing any violations and 
any future violations of Sections 15(g) and 17(a) of the Exchange Act and Rule 17a-4 thereunder 
and Rule 501 of Regulation AC; 
 
B. Respondent is censured; 
 
C. Respondent shall, within ten (10) days of the entry of this Order, pay a civil money 
penalty in the amount of $9,500,000 to the Securities and Exchange Commission for transfer to the 
general fund of the United States Treasury, subject to Exchange Act Section 21F(g)(3).  If timely 
payment is not made, additional interest shall accrue pursuant to 31 U.S.C. § 3717.  Payment must 
be made in one of the following ways:   
 
(1) Respondent may transmit payment electronically to the Commission, which 
will provide detailed ACH transfer/Fedwire instructions upon request;  
 
(2) Respondent may make direct payment from a bank account via Pay.gov 
through the SEC website at http://www.sec.gov/about/offices/ofm.htm; or  
 
(3) Respondent may pay by certified check, bank cashier’s check, or United 
States postal money order, made payable to the Securities and Exchange 
Commission and hand-delivered or mailed to:  
 
Enterprise Services Center 
Accounts Receivable Branch 
HQ Bldg., Room 181, AMZ-341 
6500 South MacArthur Boulevard 
Oklahoma City, OK 73169 
 
Payments by check or money order must be accompanied by a cover letter identifying 
DBSI as a Respondent in these proceedings, and the file number of these proceedings; a copy of 
the cover letter and check or money order must be sent to Yuri B. Zelinsky, Division of 
Enforcement, Securities and Exchange Commission, 100 F St., N.E., Washington, DC 20549-
5041. 
 
 
By the Commission. 
 
 
 
 
       Brent J. Fields 
       Secretary 
 

UNITED STATES OF AMERICA 

 Before the 

 SECURITIES AND EXCHANGE COMMISSION 

 

SECURITIES EXCHANGE ACT OF 1934 

Release No. 79083 / October 12, 2016 

 

INVESTMENT ADVISERS ACT OF 1940 

Release No. 4548 / October 12, 2016 

 

ADMINISTRATIVE PROCEEDING 

File No. 3-17622 

 
 

In the Matter of 

 

DEUTSCHE BANK 

SECURITIES INC., 

 

Respondent. 

 

 

ORDER INSTITUTING ADMINISTRATIVE 

AND CEASE-AND-DESIST PROCEEDINGS 

PURSUANT TO SECTIONS 15(b) AND 21C 

OF THE SECURITIES EXCHANGE ACT OF 

1934 AND SECTION 203(e) OF THE 

INVESTMENT ADVISERS ACT OF 1940, 

MAKING FINDINGS, AND IMPOSING 

REMEDIAL SANCTIONS AND A CEASE-

AND-DESIST ORDER   

   

 

I. 

 

 The Securities and Exchange Commission (“Commission”) deems it appropriate and in the 

public interest that public administrative and cease-and-desist proceedings be, and hereby are, 

instituted pursuant to Sections 15(b) and 21C of the Securities Exchange Act of 1934 (“Exchange 

Act”) and Section 203(e) of the Investment Advisers Act of 1940 (“Advisers Act”) against 

Deutsche Bank Securities Inc. (“Respondent” or “DBSI”). 

 

II. 

 

 In anticipation of the institution of these proceedings, Respondent has submitted an Offer 

of Settlement (the “Offer”) which the Commission has determined to accept.  Solely for the 

purpose of these proceedings and any other proceedings brought by or on behalf of the 

Commission, or to which the Commission is a party, and without admitting or denying the findings 

herein, except as to the Commission’s jurisdiction over it and the subject matter of these 

proceedings, which are admitted, Respondent consents to the entry of this Order Instituting 

Administrative and Cease-and-Desist Proceedings Pursuant to Sections 15(b) and 21C of the 

Securities Exchange Act of 1934 and Section 203(e) of the Investment Advisers Act of 1940, 

Making Findings, and Imposing Remedial Sanctions and a Cease-and-Desist Order (“Order”), as 

set forth below. 

 

 



  
 

 2 

III. 

 

 On the basis of this Order and Respondent’s Offer, the Commission finds1 that: 

 

SUMMARY 

 

 1. This matter concerns three separate violations of the federal securities laws by 

DBSI:  (1) the failure to establish, maintain, and enforce policies and procedures reasonably 

designed to prevent the misuse of material, nonpublic information generated by its equity research 

analysts, in violation of Section 15(g) of the Exchange Act; (2) the publication of a research report 

that was falsely certified as accurately reflecting the lead analyst’s view regarding the covered 

company, in violation of Rule 501 of Regulation Analyst Certification (“Regulation AC”); and (3) 

the failure to preserve and furnish promptly to the Commission staff certain electronic 

communications relating to DBSI’s business as a broker and dealer, in violation of Section 17(a) of 

the Exchange Act and Rule 17a-4 thereunder.   

 

 2. From at least January 2012 through December 2014 (“the relevant period”), DBSI 

failed to establish, maintain, and enforce policies and procedures reasonably designed to prevent its 

equity research analysts from misusing material, nonpublic information by, among other things, 

disclosing analysts’ as yet unpublished views and analyses that appeared in subsequent DBSI 

research reports, certain changes of estimates by analysts, and short term trading recommendations 

that were inconsistent with the analysts’ published long term ratings.  The risk that material, 

nonpublic information could be misused was heightened by deficiencies in DBSI’s policies and 

procedures pertaining to communications between DBSI’s equity research analysts and DBSI 

customers and DBSI sales and trading personnel.  In particular, although DBSI had certain policies 

and procedures and training in place for its equity research analysts, DBSI failed to establish, 

maintain, and enforce policies and procedures reasonably designed to prevent its equity research 

analysts from disclosing material, nonpublic information to DBSI customers and DBSI sales and 

trading personnel through various customer interactions and internal communications with DBSI 

sales and trading personnel. 

        

 3. DBSI violated the analyst certification requirement of Regulation AC.  On March 

29, 2012, DBSI issued a research report prepared and certified by a senior equity research analyst 

that was inconsistent with the analyst’s personally held view.  In the research report, the analyst 

rated the covered company’s stock a “BUY,” and certified that his recommendation reflected his 

personal views.  In fact, however, the “BUY” recommendation was inconsistent with the analyst’s 

personal view that the company should have been downgraded. 

 

 4. DBSI also failed to preserve, maintain, and timely produce to the Commission staff 

certain electronic communications that had been conducted on an internal DBSI messaging system, 

in violation of the record keeping requirements of Section 17(a) of the Exchange Act and Rule 17a-

4 thereunder.   

   

                                                 
1
  The findings herein are made pursuant to Respondent's Offer of Settlement and are not binding on any 

other person or entity in this or any other proceeding. 



  
 

 3 

 5. Accordingly, DBSI willfully violated Sections 15(g) and 17(a) of the Exchange Act 

and Rule 17a-4 thereunder and Rule 501 of Regulation AC.  

 

RESPONDENT 

 

6. Deutsche Bank Securities Inc., a Delaware corporation with its principal executive 

offices in New York, New York, is a broker-dealer and investment adviser registered with the 

Commission pursuant to Section 15(b) of the Exchange Act and Section 203 of the Advisers Act.   

DBSI is an indirect wholly-owned subsidiary of Deutsche Bank AG, a foreign private issuer whose 

stock is registered with the Commission pursuant to Section 12(b) of the Exchange Act and trades 

on the New York Stock Exchange. 

 

FACTS 

 

A. DBSI’s Equity Research 

 

7. DBSI’s equity research department is comprised of approximately fifty research 

analysts covering almost nine hundred stocks traded in the United States.  DBSI’s equity research 

analysts provide the firm’s customers with investment recommendations and analysis on public 

companies and their stocks through published research reports.  For each covered company, DBSI 

analysts publish reports that include an investment rating that reflects their twelve-month view of 

the stock’s performance, a price target that they expect the stock to reach in twelve months, and 

estimates of the company’s expected upcoming quarterly and annual earnings.  During the relevant 

period, DBSI utilized a three-category investment rating system:  BUY, HOLD, and SELL.  DBSI 

equity research reports are sent to DBSI customers electronically and made available to DBSI 

customers on DBSI’s website.  DBSI research reports also are made available to others through 

third-party research service providers. 

 

8. DBSI also allowed its equity research analysts to publish short term trade ideas on 

a DBSI website named “SOLAR,” which is accessible to all DBSI customers.  DBSI’s policies 

and procedures required that these short term trade ideas be aligned with the analyst’s published 

long term investment rating for that security, unless the analyst had a published long term rating 

of HOLD, in which case a short term trade idea was permitted to be either a BUY or SELL.2   

 

9. During the relevant period, DBSI encouraged its equity research analysts to have 

frequent contact with DBSI customers and DBSI sales and trading personnel.  Accordingly, DBSI 

equity research analysts communicated regularly with both DBSI customers and DBSI sales and 

trading personnel by telephone, email, instant messaging, and in-person to answer questions about 

the public companies and the industries and industry sectors that the analysts covered.  DBSI had 

policies and procedures, and trained its research analysts, on how to engage in such 

communications, including that they must speak consistently with their published views.  DBSI 

                                                 
2  DBSI’s policies and procedures expressly stated that “if the underlying recommendation is a BUY, the [short 

term recommendation] may only be a BUY” and “if the underlying recommendation is a SELL, the [short term 

recommendation] may only be a SELL.” 

 



  
 

 4 

sales and trading personnel conveyed information that they had learned from DBSI equity research 

analysts to DBSI customers.       

 

10. DBSI’s performance evaluation and compensation system for its equity research 

analysts, during the relevant period, took into consideration customer assessments of DBSI’s 

research analysts.3  DBSI measured customer satisfaction with its research analysts based, in part, 

on certain independent surveys of investors and other consumers of equity research, such as the 

Institutional Investor magazine’s “All-America Research Team” and Greenwich Associates’ 

“Greenwich Research Team Survey,” as well as votes that each analyst received directly from 

institutional investors through a process known as “broker votes.”  These three rankings accounted 

for more than forty percent of an analyst’s internal performance rating, making them when 

combined the largest component of a research analyst’s performance evaluation.  One DBSI 

analyst acknowledged a customer’s positive appraisal of his work and the customer’s vote for him 

in the Institutional Investor poll, by responding in an email: “[I]t’s how we get ‘paid,’ so thanks 

very much.”  This evaluation and compensation structure created a risk that DBSI equity research 

analysts would share their potentially market-moving nonpublic views about covered companies 

with DBSI customers. 

 

11. Many institutional investors rate research analysts and other “sell side” broker-

dealer personnel by assigning “broker votes” to those whom they want to reward for good service, 

and then allocate their trading, and resulting commissions, to the firms whose personnel they have 

rated the most highly.  DBSI research analysts were aware of the importance that DBSI placed on 

broker votes and investor surveys.  For example, in early March 2012, DBSI held an equity 

research analyst meeting to emphasize to DBSI’s research analysts and sales personnel the 

importance of Institutional Investor votes to DBSI.  Slides used during the meeting, and 

subsequently distributed to DBSI’s analysts, described a campaign that DBSI intended to conduct 

to generate Institutional Investor votes for the firm and its employees with the goal of becoming a 

top five bank in Institutional Investor voting.   

 

B.  DBSI Failed to Establish, Maintain, and Enforce Policies and Procedures That Were 

Reasonably Designed to Prevent DBSI Equity Research Analysts from Disclosing 

Material, Nonpublic Information Regarding, Among Other Things, Their Views and 

Analyses of Covered Companies 
 

12. During the relevant period, DBSI’s policies and procedures governing the conduct 

of its equity research department were primarily set forth in two documents: (1) “Research Policies 

and Procedures Manual – Markets US” (“Research Manual”) and (2) the “Research Integrity and 

Cross-Divisional Interactions Policy – Corporate and Investment Bank” (“CIB”).  These documents 

included, in some instances, overlapping policies and procedures.  During the relevant period, DBSI 

equity research analysts also received training on the firm’s policies and procedures, including 

                                                 
3
  NASD Rule 2711(d)(2), which was in effect during the relevant period, required broker dealers to consider, 

among other things, “the overall ratings received from clients, sales force, and peers independent of the member’s 

investment banking department, and other independent ratings services” in determining the compensation of their 

research analysts.  The rule did not, however, prescribe the relative weight that a firm ought to assign to any of the 

factors.  

 



  
 

 5 

during mandatory annual compliance trainings for equity research personnel, and also received 

training and email alerts regarding emerging compliance issues.   

 

i. Analysts’ Views and Analyses Intended for Publication in Forthcoming DBSI 

Research Reports and Estimate Changes of Less Than Ten Percent 

 

13. DBSI’s policies and procedures required the broad public dissemination of all DBSI 

research reports.  To ensure simultaneous public dissemination, DBSI’s policies and procedures 

generally prohibited equity research analysts from sharing forthcoming research, deemed “research 

in process,” with anyone outside of the firm’s equity research department.  DBSI’s policies and 

procedures also required equity research analysts to publish a research report before sharing a 

“change in view, recommendation, rating, price target or estimate” with select DBSI customers and 

DBSI sales and trading personnel.  These policies and procedures, which were designed to prevent 

the misuse of material, nonpublic information generated by DBSI’s equity research analysts, were 

not reasonably designed in two key respects. 

 

14. DBSI’s written policies and procedures stated that “research in process” includes 

two periods (1) “the time frame beginning the moment an analyst begins drafting a report and 

ending when the report is published,” as well as (2) an “earlier time period … beginning when an 

analyst has definitely decided to publish a report and has a developed thesis for that report.”  This 

policy, however, was susceptible to differing interpretations.4   

 

15. For example, DBSI compliance and equity research personnel who were 

responsible for providing guidance and training to analysts and others on DBSI’s policies and 

procedures believed that “research in process” did not exist until an equity research analyst had a 

developed thesis for a forthcoming research report, regardless of whether the analyst or the 

analyst’s team had decided to publish a research report or even begun drafting a research report, as 

stated in the first prong of DBSI’s written policy.  Similarly, a senior equity research analyst 

(“Analyst A”) claimed that because he had not yet developed an investment thesis following a non-

deal road show, his team did not have “research in process” even after he had directed a junior 

analyst who reported to him to begin drafting a research report that they intended to publish two 

days later.  In the meantime, Analyst A proceeded to speak with DBSI customers regarding his 

materially changed views of the issuer.   

 

16. DBSI’s policies and procedures stated that analysts “must safeguard research in 

process” and that research in process “must not be shared with clients or potential clients (external 

or internal) prior to publishing.”  DBSI’s policies and procedures also directed equity research 

analysts to “take steps to ensure that the contents of a pending research report cannot be viewed by 

those outside of the research department,” and DBSI had established other controls to address these 

risks, such as restricting access to the floor where fundamental equity analysts worked and 

maintaining a policy that prohibited all “market-sensitive research reports” from being written on 

                                                 
4  Under DBSI’s policies and procedures, DBSI equity research personnel were directed to contact DBSI’s 

Legal and Compliance departments for guidance “should there be any question concerning whether there is 

‘research in process.’” 

 



  
 

 6 

the sales and trading floor.  However, these policies and procedures did not address the ambiguity 

in DBSI’s definition of “research in process.” 

  

17. At the same time, however, DBSI’s policies and procedures permitted equity 

research analysts to communicate with DBSI customers and DBSI sales and trading personnel 

about companies that were the subjects of research in process if the communications “did not 

reflect or signal a material change from the analyst’s prior published view.”   

 

18. DBSI’s policies and procedures did not adequately define what constituted a 

“material change.”  DBSI also failed to provide adequate guidance and training to its equity 

research analysts regarding what constituted “a material change from the analyst’s prior published 

view.”   For example, under DBSI’s written policies and procedures, an analyst’s rating or price 

target change was deemed to be always material, but an estimate change by an equity analyst was 

considered material only when the change was greater than ten percent.5  Furthermore, DBSI 

equity research and compliance personnel applied the ten percent threshold based solely on 

changes in an analyst’s annual, not quarterly, estimates.  Thus, DBSI policies and procedures 

permitted equity analysts to disclose to customers other than in published research reports greater 

than ten percent changes in quarterly estimates, as long as such changes did not also result in a 

greater than ten percent change in their annual estimates.  

 

19.   An equity analyst’s change of ten percent or less in estimates of annual or quarterly 

corporate financial performance – particularly when the analyst is highly regarded – can be, and 

often is, highly relevant and material to investors.6 

 

20. Accordingly, by adopting a threshold of ten percent for materiality with regard to 

analyst estimate changes, and limiting the policy only to changes in annual estimates, DBSI created 

a risk that analysts would disclose to certain customers material, nonpublic information regarding 

changes to annual and quarterly estimates without first publishing such information in research 

reports. 

 

                                                 
5
   In contrast to the unqualified statements contained in the firm’s written policies that analyst’s price target 

changes always were material, DBSI’s Supervisory Analyst Handbook, which governed the conduct of DBSI equity 

research personnel responsible for reviewing and approving DBSI research reports, specified that only changes to 

price targets of ten percent or greater were required to be published in research reports.  Moreover, DBSI’s policies 

concerning communications between equity research personnel and investment banking personnel provided that 

“analysts may never provide Banking (or any other party) with an advance notification of a pending rating, price 

target, or estimate change.”  (Emphases added.)  This policy did not condition the restriction on whether an estimate 

change was material or greater than ten percent.   

 
6
  The materiality standard applied by the courts to Section 10(b) and Rule 10b-5 of the Exchange Act, a 

principal antifraud provision of the federal securities laws applies in the context of Section 15(g).  Information is 

deemed material if there is a substantial likelihood that a reasonable investor would consider it important in making an 

investment decision.  Basic Inc. v. Levinson, 485 U.S. 224, 231-232 (1988), citing TSC Industries, Inc. v. Northway, 

426 U.S. 438, 449 (1976).  An omitted fact is material if there is a substantial likelihood that the disclosure of that fact 

would have been viewed by a reasonable investor as having significantly altered the total mix of information made 

available.  Id.   

  



  
 

 7 

21. DBSI’s policies and procedures did not specify what other types of pre-publication 

information, apart from ratings, price targets, and certain estimate changes, was deemed to be 

material, and therefore, could only be disclosed in a published research report. 

 

22. As a result of these weaknesses in its policies and procedures, DBSI failed to prevent 

the disclosure of potentially market sensitive information that was to be included in forthcoming 

DBSI research reports and analysts’ estimate changes of ten percent or less.  For example:  

 

a. On February 2, 2012, a DBSI senior equity research analyst (“Analyst B”) 

published a research report on Company A.  In the report, Analyst B estimated that the 

company’s 2012 first quarter earnings before interest, taxes, depreciation, and amortization 

(“EBITDA”)7 would be $850.6 million, which included a first quarter EBITDA of $430.9 

million for a region of Company A’s business (“Region A”).  Approximately two months 

later, on April 9, 2012, the Analyst B told certain DBSI customers and DBSI sales and 

trading personnel that he expected Company A’s first quarter EBITDA to be higher than his 

previously published estimate, explaining that he had calculated a first quarter EBITDA of 

$490 million for Region A.  This change in the analyst’s Region A estimate represented a 

13.7% increase from his earlier estimate for Region A and a 6.9% increase from his earlier 

estimate for Company A in total.  Ten days later, on April 19, 2012, the Analyst B published 

another research report on Company A, in which he raised his estimate of Company A’s 

first quarter EBITDA to $906 million, based largely on an increase in his estimate for 

Region A’s first quarter EBITDA to $479.5 million. 

 

b. On February 21, 2012, Analyst B published a research report on Company 

B.  In the report, Analyst B estimated that the company’s 2012 first quarter EBIDTA would 

be $125.7 million.  Two months later, on April 23, 2012, the day before Company B was 

scheduled to release its 2012 first quarter earnings, the analyst told certain DBSI customers 

that he expected Company B’s first quarter EBITDA to be as high as $139 million, which 

was a 10.6% increase from his earlier estimate.  The next day, the analyst emailed a DBSI 

salesperson stating that even a first quarter EBITDA of $134 for Company B was a 

“meaningful beat.”  Analyst B never issued a research report with the revised estimate for 

Company B. 

 

c. On March 28, 2012, Analyst A hosted a non-deal road show for Company 

C.8  Beginning at about 7:30 a.m. and continuing until about 3:15 p.m., the company’s 

executives met privately with DBSI customers.  Analyst A attended all of these meetings.  

Shortly after the meetings had ended, Analyst A contacted certain DBSI customers, 

sharing his impressions from the meetings and his view of the company’s prospects for 

the quarter.  That night, Analyst A sent an email to the head of DBSI’s Institutional 

Client Group for North America, stating that he had a “note hitting in the a.m. [that] will 

likely rattle the stock.”  The following morning, March 29, 2012, Analyst A published a 

                                                 
7  EBIDTA is used by some research analysts as a measure of a company’s profitability. 

 
8  A non-deal road show is a series of meetings between company management and representatives of 

institutional investors, typically hosted by a broker-dealer, during which the participants discuss the performance and 

future prospects of the company, but no securities are offered for sale.     



  
 

 8 

research report on Company C that contained information that was substantially the same 

as the information that he had conveyed to at least one of the DBSI customers with whom 

he spoke the day before, as reflected in notes that were taken by that particular DBSI 

customer.  

 

d. In an instant message to a junior equity research analyst sent on April 4, 

2012, Analyst A described his practice of previewing his forthcoming research for certain 

customers.  After the junior analyst had asked Analyst A whether he was going to issue a 

research report following a meeting that the senior analyst had hosted between the 

management of a company that he covered and certain DBSI customers, Analyst A 

responded that he would not publish immediately, and explained that he usually waited two 

days following such a meeting before publishing a report because it “give[s] clients the 

opportunity to trade on what they lea[rned] and more importantly allows me to talk about it 

before telling the world.”  The junior analyst replied, “understood and makes sense.” 

 

ii. Unpublished Short Term Trade Recommendations That Were Inconsistent 

With An Analyst’s Long Term Published Ratings  
 

23. In addition to publishing long term ratings based on their twelve-month view of a 

stock, DBSI’s equity research analysts also were permitted to publish short term trade ideas on 

DBSI’s SOLAR website.  DBSI’s policies and procedures expressly stated that SOLAR was “the 

only setting wherein an analyst may express a short term trade idea.”  DBSI’s policies and 

procedures prohibited equity research analysts from selectively disclosing any trading 

recommendation that was contrary to their long term published ratings.  Similarly, all DBSI 

research reports issued during the relevant period included the following standard disclosure 

regarding short term trade ideas:  “Deutsche Bank equity research analysts sometimes have 

shorter-term trade ideas (known as SOLAR ideas) that are consistent or inconsistent with Deutsche 

Bank’s existing longer term ratings.  These trade ideas can be found at the SOLAR link at 

http://gm.db.com.”  In addition, DBSI’s policies and procedures stated that pending SOLAR ideas 

must be treated as material, nonpublic information, and accordingly, all DBSI customers had to 

have equal access to them.9   

 

24. DBSI’s policies and procedures with regard to short term trade ideas were not 

reasonably designed because they failed to clearly define what constituted a “short term trade 

idea.”  Indeed, DBSI’s public disclosures on the SOLAR website and in blast emails sent to 

DBSI customers announcing new SOLAR ideas were inconsistent with DBSI’s policies and 

procedures.10  The SOLAR website and the blast emails stated that SOLAR ideas were limited to 

short term trade ideas that an analyst believed would be valid for at least two weeks.  The 

disclosure stated, in pertinent part, that: “Analyst believes the stock will out [or under] perform 

                                                 
9 The firm’s training materials during the relevant period reiterated these concepts.  For example, the slides 

for an annual compliance training for research analysts in 2011 included the following guidance: “Never Write or 

Say Anything Contrary to Your Published Investment View,” “Never Contradict Published Investment View Even If 

You Are Not the Lead Analyst,” “Never Traffic In Material Nonpublic Information,” and “Use SOLAR to Express 

All Short Term Trade Ideas.” 
 
10

  They also were inconsistent with the public disclosure made in all DBSI research reports issued during the 

relevant period that short term trade ideas could be found on the SOLAR website.   



  
 

 9 

the market and/or sector delineated over a time frame of no less than 2 weeks with a high to 

moderate [or moderate to low] return to risk profile.”  (Emphasis added).  However, DBSI’s 

policies and procedures failed to address the risk that in disseminating short term trade ideas of 

less than two weeks conviction, which were not required to be published on the SOLAR website, 

research analysts could divulge material, nonpublic information regarding changes in their views 

of a company and provide trade ideas that ran counter to their published long term ratings, in 

violation of DBSI’s policies and procedures.  

 

25. As a result of these weaknesses in its policies and procedures, DBSI failed to prevent 

research analysts from disclosing short term trade ideas that were not published in SOLAR, some of 

which were inconsistent with the analyst’s published long term rating, in communications with 

DBSI customers and DBSI sales and trading personnel.  For example:      

 

a. In a May 3, 2012 instant message, Analyst A told DBSI’s head trader 

responsible for trading consumer stocks to “short” a stock for which the analyst had a 

published HOLD rating.  Similarly, in an October 10, 2012 email to DBSI sales and 

trading personnel, which he copied to three junior equity research analysts who reported 

to him at the time, the same analyst recommended a “buy” for a stock for which he had a 

published HOLD rating.   

   

b. In an April 24, 2012 instant message, Analyst B told a DBSI customer to 

“get out” and “puke” a stock for which he had a published HOLD rating.  Similarly, in a 

May 20, 2012 email, Analyst B told another DBSI customer to “short” a different stock for 

which the analyst had a published HOLD rating.  

 

C. DBSI Failed to Establish, Maintain, and Enforce Reasonable Policies and 

Procedures For Communications Between DBSI Equity Research Analysts and 

DBSI Customers and DBSI Sales and Trading Personnel 

 

26. DBSI's failure to establish, maintain, and enforce  policies and procedures 

reasonably designed to prevent its equity research analysts from disclosing material, nonpublic 

information was further amplified by shortcomings in its policies and procedures pertaining to 

communications between DBSI’s equity research analysts and both DBSI customers and DBSI 

sales and trading personnel.  In particular, DBSI failed to establish, maintain, and enforce 

reasonable policies and procedures to prevent its equity research analysts from using various 

customer interactions and internal communications with DBSI sales and trading personnel, 

including, but not limited to, morning calls, squawks, idea dinners, and non-deal road shows to 

disclose potentially market sensitive information to DBSI customers and DBSI sales and trading 

personnel.  These deficiencies created a risk that material, nonpublic information generated by 

DBSI equity research analysts might be misused. 

  

i. Morning Calls and Squawks 

 

27. For most days the stock market was open, DBSI held a premarket internal “morning 

call” during which DBSI equity research analysts provided information and recommendations to the 

DBSI sales staff on the companies and stocks that they covered.  During the day, DBSI research 



  
 

 10 

analysts also communicated breaking news and recommendations on the companies and stocks that 

they covered to the DBSI sales staff over an internal intercom system known as a “squawk box.”  

DBSI asserts that it had an unwritten policy of allowing research analysts to speak on morning calls 

generally if they were discussing only recently-published research.  Similarly, DBSI asserts that 

research analysts were only permitted to speak on the squawk box if they were discussing recently-

published research or responding to publicly-available information, such as breaking market news, 

earnings, or a corporate event.  Nevertheless, at various times, morning calls and squawks were not 

monitored or were inadequately monitored and remarks made by analysts that went beyond that 

which was permitted were not subjected to follow-up by compliance personnel or supervisory 

analysts.11  

 

28. DBSI sales personnel were permitted to share the information and recommendations 

that they learned during these morning calls and over the squawk box with DBSI customers.  This 

created a risk that DBSI equity research analysts could disclose unpublished market sensitive 

information during morning calls and squawks, which DBSI sales personnel in turn could relay to 

external and internal customers.  DBSI failed to establish, maintain, and enforce policies and 

procedures reasonably designed to address the risk that research analyst participation in morning 

calls and squawks could result in the disclosure of material, nonpublic information.   

 

29. Prior to the time, in early 2013, when DBSI became aware of the Commission 

staff’s investigation, DBSI lacked policies and procedures reasonably designed to prevent the 

disclosure of potentially material, nonpublic information with regard to morning calls and 

squawks.  For example, compliance personnel did not regularly monitor the information that 

research analysts and others shared during morning calls and over the squawk box, and DBSI 

compliance did not maintain any record of the information that research analysts shared during 

their squawks.  Consequently, hundreds of morning calls and squawks were conducted without any 

oversight from DBSI compliance personnel or supervisory analysts. 

 

30. Moreover, during the relevant period, DBSI failed to enforce even the limited 

policies and procedures that the firm had established pertaining to morning calls and the squawk 

box.  For example, with respect to squawks, DBSI’s policies and procedures required that to 

“relay information intraday [on the squawk box] (including rating, estimate, or price target 

changes and newsworthy items), Analysts must contact the Equity Focus Group prior to 

publication of [research reports], and should email the main points to the Equity Focus Group.”  

However, DBSI equity research analysts regularly failed to email their main points to the Equity 

Focus Group, but nonetheless, were still permitted to relay information on the squawk box.  

Similarly, with respect to morning calls, DBSI’s policies and procedures prohibited equity 

research analysts who had not very recently published a research report from commenting during 

morning calls without first having contacted the Equity Focus Group to preview their planned 

comments.  However, this procedure was seldom followed.  The head of DBSI’s Equity Focus 

Group acknowledged that this procedure “did not reflect how it actually happens.”   

                                                 
11

  Personnel from DBSI’s Equity Focus Group, which is a group within DBSI’s research department, organized 

and hosted the morning calls and squawks.  Although the Equity Focus Group was not part of DBSI’s compliance 

department, it had established controls over the morning meetings and squawks, such as controlling which particular 

analysts could provide commentary and retaining the ability to cut off an analyst if any commentary was inappropriate. 

 



  
 

 11 

 

31. As a result of these deficiencies, DBSI failed to prevent the disclosure of potentially 

market sensitive information during morning calls and over the squawk box.  For example:   

 

a. On March 22, 2012, Analyst C spoke about Company D during a morning 

call, after he had published a research report on the company earlier that morning in 

which the analyst had upgraded his rating for its stock from a HOLD to a BUY and 

increased his price target for the stock to $100.  During the morning call, Analyst C stated 

his view that, assuming Company D had fifteen percent earnings per share growth for 

2013, the company was a “$110 to $115 stock.”  A week later, on March 28, 2012, 

Analyst C spoke about Company D during another morning call, having published a 

research report on the company earlier that morning.  The analyst once again gave an 

estimated future price of the stock that was above his published $100 price target: “My 

price target is $100 right now just cause I haven’t revised the model ahead of the 

[company’s fourth quarter earnings] call.  But I can, as I said last week, I can get to a 

midterm target of $110 or even a little higher.”  Analyst C never published a research 

report containing his midterm price target of at least $110.   There is no record that DBSI 

compliance or research supervisors noted this statement or took any corrective measures 

with regard to Analyst C.  

 

b. On March 29, 2012, Analyst A spoke about Company C during a morning 

call, having published a research report on the company earlier that morning that had 

maintained both his BUY rating and price target.  During the morning call, Analyst A 

explained that he had maintained his BUY rating because “obviously we just had them in 

town so it’s not kosher to downgrade on the heels of something like that.”  Analyst A also 

said, “[B]ut more importantly than that, I think there’s obviously time left in the quarter” 

and that he and his team were “gonna do our homework on it” and “gonna be in front of 

‘em.”  Less than a month later, on April 24, 2012, the morning after Company C had 

issued an unexpected press release forecasting negative first quarter comparable store 

sales, which resulted in the company’s stock losing almost one-quarter of its value in one 

day, Analyst A spoke about Company C on another morning call.  After discussing the 

company’s disappointing first quarter sales figures, he stated: “[F]ortunately, we told 

many clients a few weeks back to sell the stock….  I think the writing was on the wall 

[that] we were getting concerned about it, but I was trying to maintain, you know, my 

relationship with them.  So that’s why we didn’t downgrade it a couple weeks back.”  

 

c. On April 10, 2012, Analyst A spoke about Company E on the squawk box 

shortly after the company had announced its fourth quarter earnings.  Later that same day, 

the analyst issued a research report on Company E.  The report included substantially the 

same information that the analyst had shared in his earlier squawk, as shown below.    

 

DBSI Sales Employee’s Notes of 

Squawk   

April 10, 2012 Research 

Report 

Going to get a relief rally here. Relief Rally on Tap 

Looking at their guidance, we 

simply do not think it’s achievable. 

Guidance Looks Optimistic, In 

Our View  



  
 

 12 

Very curious as to why they’ve put 

out such high expectations.  Net net 

we don’t think they’ll be able to 

deliver.   

[Company E] would have been 

better served giving more 

conservative guidance. 

Comp is a little better ID’s [identical store sales]-

Better-Than-Expected 

Staying on the sidelines. Net, we remain comfortably 

uninvolved (i.e., HOLD rating). 

 

ii. Idea Dinners 

 

32. Consistent with DBSI’s practice of encouraging its equity research analysts to 

interact with DBSI customers, DBSI research analysts were permitted to participate in “idea 

dinners” hosted by the firm.  Idea dinners12 presented another opportunity for equity research 

analysts to discuss the public companies and stocks they covered with DBSI customers in an 

informal setting.  Under the typical format, DBSI equity research analysts as well as DBSI 

customers were expected to share at least one buy or sell investment idea.  The idea dinners created 

a heightened risk that DBSI equity research analysts could disclose material, nonpublic 

information to selected customers, in order to receive positive assessments, such as Institutional 

Investor votes, from those DBSI customers for the analysts’ annual evaluations by DBSI.  DBSI 

failed to take reasonable steps to prevent material, nonpublic information from being disclosed at 

these dinners. 

 

33. DBSI failed to monitor whether its equity research analysts were violating DBSI’s 

policies and procedures at idea dinners, by, for example, offering trade recommendations that were 

inconsistent with their published long term ratings.  DBSI had no policies and procedures and no 

formal trainings specifically related to such dinners.  Moreover, DBSI compliance personnel did not 

attend idea dinners nor did they preview or subsequently review the trade ideas shared during 

these dinners.  DBSI also did not maintain any record of the investment ideas shared at idea 

dinners.   

 

34. As a result of these deficiencies, DBSI failed to prevent the disclosure of short term 

trade ideas that were not published on SOLAR and were inconsistent with analysts’ published 

ratings.  For example, at an April 26, 2012 idea dinner hosted by DBSI, which was attended by 

approximately ten DBSI customers, a DBSI junior equity research analyst who attended together 

with Analyst A shared two trade recommendations for companies that he covered along with 

Analyst A that were inconsistent with their published HOLD ratings. 

 

iii DBSI Customer - Issuer Meetings Conducted by DBSI Research Analysts 

 

35. DBSI also encouraged its equity research analysts to interact with DBSI 

customers by, among other things, organizing or hosting events such as non-deal road shows, 

company tours, and other similar issuer/customer meetings, which provided DBSI customers an 

opportunity to meet directly and interact with management of the companies covered by DBSI 

                                                 
12  Occasionally, these events were held during lunches, but for ease of reference, all are referred to 

collectively as idea dinners herein. 



  
 

 13 

analysts.  DBSI research analysts that hosted such events often issued research reports on the 

companies shortly after the events.  The reports typically included the analyst’s key impressions 

from the meetings.  Under these circumstances, there was a heightened risk that, during the 

period after the event until the publication of a report by the hosting analyst, an analyst could 

disclose material, nonpublic information regarding the analyst’s views of the company as a result 

of information learned or impressions formed during the event that later would appear in a 

published research report.  DBSI also lacked policies and procedures reasonably designed to 

determine whether DBSI equity research personnel who attended the events with company 

management were divulging or acting upon material, nonpublic information obtained from 

company management. 

   

36. Despite these risks, DBSI failed to establish, maintain, and enforce policies and 

procedures reasonably designed to prevent its equity research analysts from disclosing material, 

nonpublic information to certain DBSI customers and DBSI sales and trading personnel 

following these events and prior to the publication of research reports that contained information 

that the analyst may have learned and views that the analyst may have formed during these 

events.  DBSI had no policies and procedures that addressed these events, apart from a prohibition 

against DBSI research and investment banking personnel jointly attending or organizing non-deal 

road shows.  DBSI did not provide any specific training for its analysts related to these events or on 

how to conduct customer contacts subsequent to these events.  DBSI compliance personnel did not 

attend or monitor these events or chaperone the analysts’ contact with customers immediately after 

these events and prior to the publication of post-event research reports.   

 

37. As a result, on several occasions during the relevant period, DBSI failed to prevent 

equity research analysts from disclosing nonpublic market sensitive information that they had 

learned or developed during these issuer/customer events to certain DBSI customers and DBSI sales 

and trading personnel before the same information appeared in DBSI research reports.  For 

example:   

 

a. As discussed above, on March 28, 2012, Analyst A disclosed the substance 

of his forthcoming research report on Company C to certain DBSI customers immediately 

after hosting a non-deal road show for the company.    

 

b. On April 3, 2012, Analyst A hosted ten DBSI customers for a 

headquarters trip to Company F.  Beginning at approximately 2:00 p.m., Analyst A and 

DBSI customers met privately with Company F management.  Early the next morning, 

Analyst A emailed his impressions from the trip to select DBSI customers and DBSI 

sales and trading personnel.  The subject line of his emails varied for different DBSI 

customers, ranging from “these are full notes” to “some good color for you today … get 

long brotha.”  In the email, the analyst emphasized that in his opinion Company F 

“sounded rock solid.”  One DBSI customer who received the email thanked Analyst A 

for his “great summary.”  Later that same day, the junior equity research analyst who was 

working on an initial draft of the forthcoming Company F research report emailed 

Analyst A that he had emphasized points from Analyst A’s email in his draft of the 

research report.  On April 9, 2012, Analyst A published a research report on Company F 



  
 

 14 

that increased his price target from $49 to $52 and contained information that was 

substantially the same as the information that he had conveyed in his April 4, 2012 email. 

  

D. DBSI Issued a Research Report by a Senior Equity Research Analyst That Was 

Inconsistent With His Personally Held View 

 

38. On March 29, 2012, DBSI issued a research report by Charles P. Grom, a DBSI 

senior equity research analyst, on Big Lots, Inc., in which Grom reiterated his BUY rating.  As 

required by Regulation AC, Grom signed an analyst certification that was included at the end of 

the report, which stated: “The views expressed in this report accurately reflect the personal views 

of the undersigned lead analyst(s) about the subject issuer and the securities of the issuer.”  In 

fact, however, his BUY rating was inconsistent with his personal view that the company should 

have been downgraded.  As discussed above, during a morning call with DBSI’s sales and trading 

staff on the day that his research report was published, as well as on at least two subsequent 

occasions, Grom stated that he wanted to, but did not, downgrade Big Lots in order to maintain 

his relationship with its management.  Grom subsequently repeatedly stated that at about the time 

that he had published the report in question, he had told certain DBSI customers to sell Big Lots 

stock, notwithstanding his published BUY rating.13     

 

E. DBSI Failed to Timely Produce and Preserve Internal DB Chat Communications   
 

39. In early 2015, during the course of the Commission staff’s investigation into 

DBSI’s policies and procedures, DBSI discovered a problem with the software responsible for 

preserving electronic communications sent and received through DBSI’s internal “DB Chat” 

messaging system.  DBSI personnel, including equity research personnel, used DB Chat to 

conduct DBSI business.  Indeed, DBSI’s policies and procedures specifically stated that the DB 

Chat system was “for business use only.”   

 

40. After discovering the problem, DBSI was able to recover a substantial amount of 

the DB Chat communications sent and received by DBSI equity research personnel during the 

relevant period, although it could not represent that it had recovered all of the called-for 

communications.  Accordingly, DBSI failed to preserve for three years and preserve in an 

accessible place for two years certain internal DB Chat communications.  DBSI also failed to 

promptly furnish copies of certain DB Chat communications that had been requested by the staff 

during the investigation. 

 

 

 

 

                                                 
13

  On February 17, 2016, the Commission instituted a settled public administrative and cease-and-desist 

proceeding against Grom for violating Rule 501 of Regulation AC.  See In re Charles P. Grom, Exchange Act Rel. 

No. 77150 (February 17, 2016).  Without admitting or denying the Commission’s findings, Grom consented to the 

entry of the Commission’s order and agreed to pay a $100,000 civil penalty and to be suspended from the securities 

industry for a year.  

  



  
 

 15 

LEGAL ANALYSIS 

 

A. Section 15(g) of the Exchange Act  

 

41.  Section 15(g) of the Exchange Act requires registered broker-dealers to establish, 

maintain and enforce written policies and procedures, reasonably designed, taking into 

consideration the nature of the broker-dealer’s business, to prevent the misuse, in violation of the 

Exchange Act or the rules and regulations thereunder, of material, nonpublic information by such 

broker or dealer or any person associated with such broker or dealer.14  The internal controls 

requirements imposed by Section 15(g) are essential to protect against the risk of misuse of 

material, nonpublic information, which can undermine investor confidence in the integrity of the 

markets.  Section 15(g) is intended to guard against a broad range of potential market violations, 

including insider trading and trading in advance of material research changes.  See 143 Cong. Rec. 

E3078-04, 1988 WL 180248 (Sept. 13, 1988) (stating that “misuse of material, nonpublic 

information” as used within Section 15(f) was intended to include a broad range of market 

abuses, such as insider trading, scalping, and front running).   

 

42. Broker-dealers must be cognizant of their duties under Section 15(g) and the need to 

tailor their policies and procedures to the specific activities of the individual firm, particularly as 

their businesses evolve.  The Commission consistently has made clear that the requirement that 

broker-dealers implement and maintain policies and procedures consistent with the nature of its 

business “is critical to effectively preventing the misuse of material, nonpublic information.”  In 

re Gabelli & Co., Inc., Exchange Act Rel. No. 35057 (Dec. 8, 1994).  The Commission also has 

consistently made clear that broker-dealers must take seriously their responsibilities to design 

and enforce sufficiently robust policies and procedures to prevent the misuse of material, 

nonpublic information.  See, e.g., In re Goldman, Sachs & Co., Exchange Act Rel. No. 66791 

(April 12, 2012) (finding Section 15(g) violation where Goldman Sachs had not established, 

maintained, and enforced adequate policies and procedures concerning its trading “huddle” 

program); In re Merrill Lynch, Pierce, Fenner & Smith, Inc., Exchange Act Rel. No. 59555 (March 

11, 2009) (finding Section 15(f) violation where Merrill Lynch failed to limit or monitor traders’ 

access to the equity squawk box which broadcast material nonpublic information); In re Banc of 

America Securities LLC, Exchange Act Rel. No. 55466 (March 14, 2007) (finding Section 15(f) 

violation where Banc of America failed to establish, maintain, and enforce policies and procedures 

to protect against the misuse of material nonpublic research information).  The mere establishment 

of policies and procedures alone is not sufficient to prevent the misuse of material, nonpublic 

information.  It also is necessary to implement measures to monitor compliance with and 

enforcement of those policies and procedures.  See, e.g., In re Monness, Crespi, Hardt & Co., Inc., 

Exchange Act Rel. No. 72886 (August 20 2014) (finding Section 15(g) violation where Monness 

failed to enforce existing policies and procedures designed to protect against the misuse of 

material, nonpublic information); In re Morgan Stanley & Co. Inc., et al., Exchange Act Rel. No. 

54047 (June 27, 2006) (finding Section 15(f) violation where Morgan Stanley failed to enforce 

existing policies and procedures concerning surveillance over a four-year period).  These 

obligations are important even if no questionable trading has occurred. 

 

                                                 
14

  Section 15(g) of the Exchange Act was formerly Section 15(f) of the Exchange Act.  The provision was 

renumbered in 2010 by the Dodd-Frank Wall Street Reform and Consumer Protection Act. 



  
 

 16 

43. DBSI’s policies and procedures were not reasonably designed, given the nature of 

its business, to prevent the misuse of material, nonpublic information generated by its equity 

research analysts.  DBSI failed to establish clear and consistent policies and procedures to prevent 

its equity research analysts from disclosing material, nonpublic information, such as information 

that was to be included in forthcoming DBSI research reports, estimate changes of less than ten 

percent, and short term trading recommendations that were inconsistent with the analyst’s published 

long term ratings.  These failures were further compounded by deficiencies in DBSI’s policies and 

procedures pertaining to communications between DBSI’s equity research analysts and both DBSI 

customers and DBSI sales and trading personnel.  In particular, DBSI failed to establish, maintain, 

and enforce policies and procedures reasonably designed  to prevent its equity research analysts 

from using various customer interactions and internal communications with DBSI sales and trading 

personnel, including, but not limited to, morning calls, squawks, idea dinners, and non-deal road 

shows to disclose material, nonpublic information in the form of unpublished market sensitive 

information to select DBSI customers and DBSI sales and trading personnel.  These failures are 

amplified in light of a compensation structure that heightened the potential for the selective 

disclosure and misuse of material, nonpublic information generated by DBSI equity research 

analysts.  Nonetheless, despite these risks, DBSI failed to establish, maintain, and enforce policies 

and procedures reasonably designed to prevent its equity research analysts from disclosing to firm 

customers, either directly or indirectly through DBSI sales and trading personnel, material, 

nonpublic information. 

 

44. As a result of the conduct described above, DBSI willfully15 violated Section 15(g) 

of the Exchange Act.16 

 

B. Rule 501 of Regulation AC 

 

45. Rule 501 of Regulation AC requires that brokers, dealers, and certain persons 

associated with a broker or dealer, including research analysts, include in their research reports a 

prominent certification by the research analyst that the views expressed in the research report 

accurately reflect the research analyst’s personal views about any and all of the subject securities 

or issuers.  On March 29, 2012, DBSI issued a research report by Grom on Big Lots in which 

Grom reiterated his BUY rating.  Grom signed the Regulation AC certification for this research 

report.  However, as described above, Grom believed he should have downgraded Big Lots in his 

March 29, 2012, research report and repeatedly stated that he did not downgrade Big Lots at the 

time because he wanted to maintain his relationship with its management.  Accordingly, Grom’s 

March 29, 2012, research report did not accurately reflect his personally held view.   

 

                                                 
15  A willful violation of the securities laws means merely “‘that the person charged with the duty knows what 

he is doing.’” Wonsover v. SEC, 205 F.3d 408, 414 (D.C. Cir. 2000) (quoting Hughes v. SEC, 174 F.2d 969, 977 

(D.C. Cir. 1949)). There is no requirement that the actor “‘also be aware that he is violating one of the Rules or 

Acts.’” Id. (quoting Gearhart & Otis, Inc. v. SEC, 348 F.2d 798, 803 (D.C. Cir. 1965)). 
 
16  There is no requirement under Section 15(g) of the Exchange Act that there be an underlying insider 

trading violation or any other violation of the Exchange Act or the rules thereunder.  See In the Matter of New York 

Stock Exchange LLC, et al., Exchange Act Release No. 72065, 2014 WL 1712113, at *5 fn. 13 (May 1, 2014); In the 

Matter of Certain Market Making Activities on NASDAQ, Exchange Act Release No. 40910, 1999 WL 6716, at *6 

fn. 3 (Jan. 11, 1999). 



  
 

 17 

46. As a result of the conduct described above, DBSI willfully violated Rule 501 of 

Regulation AC. 

 

C. Section 17(a) of the Exchange Act and Rule 17a-4 Thereunder 

 

47. Section 17(a)(1) of the Exchange Act requires that broker-dealers “shall make and 

keep for prescribed periods such records, furnish such copies thereof, and make and disseminate 

such reports as the Commission, by rule, prescribes as necessary or appropriate in the public 

interest, for the protection of investors, or otherwise in furtherance of the purposes of this 

chapter.”  The Commission has emphasized the importance of the records required by the rules 

as “the basic source documents” of a broker-dealer.  Statement Regarding the Maintenance of 

Current Books and Records by Brokers and Dealers, 4 SEC Docket 195 (April 6, 1974).  The 

record keeping rules are “a keystone of the surveillance of broker and dealers by [Commission] 

staff and by the securities industry's self-regulatory bodies.”  Edward J. Mawod & Co., 46 S.E.C. 

865, 873 n.39 (1977) (citation omitted), aff'd, 591 F.2d 588 (10th Cir. 1979).  Rule 17a-4(b)(4) 

of the Exchange Act requires each broker-dealer to ‘preserve for a period of not less than three 

years, the first two years in an accessible place.... [o]riginals of all communications received and 

copies of all communications sent . . . by the … broker or dealer (including inter-office 

memoranda and communications) relating to its business as such.”  Rule 17a-4(j) of the 

Exchange Act requires broker-dealers to “furnish promptly to a representative of the 

Commission legible, true, complete, and current copies of those records of the . . . broker or 

dealer that are required to be preserved under this section … that are requested by the 

representative of the Commission.” 

  

48. DBSI failed to preserve for three years and preserve in an accessible place for two 

years certain internal DB Chat communications.  In addition, DBSI failed to promptly furnish 

copies of all DB Chat communications that had been requested by the staff during the 

investigation.    

 

49. As a result of the conduct described above, DBSI willfully violated Section 17(a) of 

the Exchange Act and Rule 17a-4 thereunder. 

 

REMEDIAL EFFORTS 
 

50. In determining to accept the Offer, the Commission considered remedial acts 

taken by DBSI. 

   

IV. 

 

 In view of the foregoing, the Commission deems it appropriate and in the public interest to 

impose the sanctions agreed to in Respondent’s Offer. 

 

 Accordingly, pursuant to Sections 15(b) and 21C of the Exchange Act and Section 203(e) 

of the Advisers Act, it is hereby ORDERED that: 

 



  
 

 18 

A. Respondent shall cease and desist from committing or causing any violations and 

any future violations of Sections 15(g) and 17(a) of the Exchange Act and Rule 17a-4 thereunder 

and Rule 501 of Regulation AC; 

 

B. Respondent is censured; 

 

C. Respondent shall, within ten (10) days of the entry of this Order, pay a civil money 

penalty in the amount of $9,500,000 to the Securities and Exchange Commission for transfer to the 

general fund of the United States Treasury, subject to Exchange Act Section 21F(g)(3).  If timely 

payment is not made, additional interest shall accrue pursuant to 31 U.S.C. § 3717.  Payment must 

be made in one of the following ways:   

 

(1) Respondent may transmit payment electronically to the Commission, which 

will provide detailed ACH transfer/Fedwire instructions upon request;  

 

(2) Respondent may make direct payment from a bank account via Pay.gov 

through the SEC website at http://www.sec.gov/about/offices/ofm.htm; or  

 

(3) Respondent may pay by certified check, bank cashier’s check, or United 

States postal money order, made payable to the Securities and Exchange 

Commission and hand-delivered or mailed to:  

 

Enterprise Services Center 

Accounts Receivable Branch 

HQ Bldg., Room 181, AMZ-341 

6500 South MacArthur Boulevard 

Oklahoma City, OK 73169 

 

Payments by check or money order must be accompanied by a cover letter identifying 

DBSI as a Respondent in these proceedings, and the file number of these proceedings; a copy of 

the cover letter and check or money order must be sent to Yuri B. Zelinsky, Division of 

Enforcement, Securities and Exchange Commission, 100 F St., N.E., Washington, DC 20549-

5041. 

 

 

By the Commission. 

 

 

 

 

       Brent J. Fields 

       Secretary