Wavering on Waivers—Bad Boy/Bad Actor Waivers Under Federal and State Law (Part 5)

Post Script

In a MarketWatch opinion published May 20, 2015, the columnist discussed the Deutsche Bank order issued by the SEC on May 1, 2015 (SEC Rel. 33-9764) granting Deutsche Bank a waiver from being an ineligible issuer under SEC Rule 405 notwithstanding Deutsche Bank’s guilty plea to wire fraud in April 2015 related to the worldwide manipulation of LIBOR (the London Interbank Offered Rate). The guilty plea, together with other related actions, resulted in Deutsche Bank paying fines and penalties of $2.519 billion. According to the dissent filed by Commissioner Kara M. Stein: 


  • Deutsche Bank’s illegal conduct involved nearly a decade of lying, cheating, and stealing. This criminal conduct was pervasive and widespread, involving dozens of employees from Deutsche Bank offices including New York, Frankfurt, Tokyo, and London. Deutsche Bank’s traders engaged in a brazen scheme to defraud Deutsche Bank’s counterparties and the worldwide financial marketplace by secretly manipulating LIBOR. The conduct is appalling. It was a complete criminal fraud upon the worldwide marketplace. 


Commissioner Stein noted that this was Deutsche Bank’s third waiver request in eight years, and she did not see any evidence “that Deutsche Bank’s culture of compliance and the reliability and accuracy of its future disclosures establishes good cause for a waiver.”  In her dissent, Commissioner Stein also noted that 100% of the twelve WKSI waivers granted since August 2013 went to large financial institutions. One can question whether the SEC will show the same leniency to smaller issuers applying for waivers under Rule 506 or Regulation A, or even well-known seasoned issuer (WKSI) status. 

Reprinted from The Colorado Bar Association, Business Law Section, May 2015

Herrick Lidstone