* Japan financial regulator orders Deutsche Securities to
* SESC said last week Deutsche entertainment of pension
officials violated regulations
* Deutsche announces tighter expense procedures, other
* Move coincides with bribery investigation into
entertainment of one pension fund
TOKYO, Dec 12 (Reuters) - Japan's financial regulator
ordered the Tokyo investment banking unit of Deutsche Bank
to bolster its compliance after its employees were
found to have entertained pension fund officials in violation of
The order by the Financial Services Agency (FSA) was widely
expected after the securities regulator last week recommended
that Deutsche Securities Inc be sanctioned for the entertainment
involving officials at three pension funds.
The civil action has overlapped with a criminal bribery
investigation into the entertainment of a former official of one
of those pension funds. The fund official and a Deutsche
Securities sales executive were arrested last week.
The spending on entertainment, which included golf outings
and overseas trips, came under scrutiny because the pension
officials involved oversaw portfolios partially invested in the
national pension scheme. That makes them public officials in the
eyes of the law and therefore subject to anti-bribery statutes.
In a statement on Thursday, Deutsche Securities apologised
and outlined steps to address the issue including the closing of
its pension solutions group, an increase in the staffing of its
compliance department and tightening of expense procedures.
In recommending sanctions last week, the Securities Exchange
and Surveillance Commission (SESC) criticised Deutsche
Securities for failing to catch falsified expense receipts
submitted by employees that spent 6.3 million yen ($61,500)
entertaining the three pension fund clients between 2010 and
The FSA's business improvement order requires Deutsche
Securities to come up with measures to prevent a recurrence and
to report periodically on its compliance to the regulator,
according to a statement issued by the FSA on its website.
Deutsche also said that it has been taking disciplinary
action against employees responsible for the entertainment,
which may include dismissal and reduction in title or pay.