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Deutsche Boerse chief under investigation over possible insider trading

Deutsche Boerse chief under investigation over possible insider tradingGerman authorities are investigating a share purchase by Deutsche Boerse’s chief executive shortly before the company announced its plans to merge with the London Stock Exchange.

German police and prosecutors investigating possible insider trading by the head of Deutsche Boerse have searched the office and apartment of Deutsche Boerse Chief Executive Carsten Kengeter, who is leading a planned merger with the London Stock Exchange.

State prosecutors in Frankfurt said the investigation centered on whether secret merger talks with the London Stock Exchange were under way when Deutsche Boerse Chief Executive Carsten Kengeter bought shares in his company in December 2015.

Kengeter bought 60,000 shares worth around €4.5m (£3.8m) in three transactions on this day. The purchase was part of the “executive board’s remuneration programme as approved by the supervisory board”, Deutsche Boerse said in a statement.

A couple of months later, it emerged that Deutsche Boerse was in talks to merge with the London Stock Exchange, and the companies agreed a deal in March.

Under the terms of the deal, if the merger completes, Kengeter will become chief executive of the joint company.

Prosecutors said they suspected that Kengeter knew of the possibility of a merger when he bought the shares and that this, if proven, would be insider trading under German law.

"The initial suspicion results from talks held by the management of Deutsche Boerse and the London Stock Exchange between July/August and December 2015 that centered on a possible merger of the two companies and the question of where the holding company could be based," prosecutors said.

Deutsche Boerse Chairman Joachim Faber backed Kengeter, saying the prosecutor's suspicion was "groundless".

He said that it was only in the second half of January that both chairmen and chief executives of the companies had agreed to begin talks about a merger. That would have been about four weeks after the purchase in mid December.

The London Stock Exchange said it welcomed the chairman's support for Kengeter and that it looked forward to completing the planned merger between the two exchange operators.
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