STOP BUYING GERMAN

The planned takeover of the London Stock Exchange has been thrown into chaos after prosecutors launched an insider dealing probe into the chief executive of its German rival.

German officials raided the offices of Deutsche Boerse, which is hoping to seize control of the London exchange, over £3.8million of shares bought days before the £21billion deal was announced.

Deutsche Boerse’s boss Carsten Kengeter – the driving force behind the takeover bid – is being probed over his purchase of the shares in his company, it was confirmed. Frankfurt-based Deutsche Boerse’s price has risen by 11 per cent since he bought the stock, netting him hundreds of thousands of pounds in profit.
The planned takeover of the London Stock Exchange has been thrown into chaos after prosecutors launched an insider dealing probe into the chief executive of its German rival

The planned takeover of the London Stock Exchange has been thrown into chaos after prosecutors launched an insider dealing probe into the chief executive of its German rival

Mr Kengeter, 49, is set to become the new chief executive of the London Stock Exchange if the takeover is successful. But the explosive allegations throw a shadow over his future involvement and raise questions about whether the controversial takeover will be completed.

Last night MPs demanded an offical probe in the UK into the deal. Conservative MP Sir Bill Cash said: ‘This is a very serious matter indeed and must be fully investigated by the Chancellor of the Exchequer, the Bank of England and other regulatory authorities.’
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Mr Kengeter, who has a home in London, bought 60,000 shares worth £3.8million in three separate transactions on December 14, 2015. The two exchanges began official talks the following month.

It is claimed he purchased the shares under the instructions of his board as part of a new bonus scheme. Sources said this was signed off by the firm’s compliance department and disclosed in accordance with German law.

Deutsche Boerse said: ‘The public prosecutor’s office of Frankfurt investigated at Deutsche Boerse in respect of a share purchase by its chief executive officer which was carried out on December 14, 2015 in implementation of the executive board’s remuneration programme as approved by the supervisory board of Deutsche Boerse.’ The firm is co-operating with the authorities.
Deutsche Boerse’s boss Carsten Kengeter (right) – the driving force behind the takeover bid – is being probed over his purchase of the shares in his company

Deutsche Boerse’s boss Carsten Kengeter (right) – the driving force behind the takeover bid – is being probed over his purchase of the shares in his company

The merger has been mired in controversy since it was first mooted in January last year. Both sides insist it is a merger of equals. Mr Kengeter, who earned £2.8million in 2015, would be chief executive and the HQ would be in London.

Sources at Deutsche Boerse insisted the investigation would have no impact on the takeover. But it could lead to fears over whether it is a suitable custodian for the 216-year-old London exchange.

Regulators take a keen interest in stock exchanges as they are vital to the financial infrastructure and any failings could have a catastrophic effect on the global system.

EU competition chiefs considering if the tie-up would create a monopoly are due to deliver a verdict next month.