Posted by
alfredlester on Wednesday, July 14, 2010 10:36:08 AM
DÜSSELDORF — The former head of IKB Deutsche Industriebank became the first person in Germany to be convicted over the financial crisis and was given a 10-month suspended sentence Wednesday.
The Dusseldorf Regional Court convicted former chief executive officer Stefan Ortseifen of market manipulation. He was accused of misstating IKB’s risks regarding asset-backed securities tied to the U.S. mortgage market in a press release. Mr. Ortsfein had denied wrongdoing.
In addition to the suspended term, Mr. Ortseifen must pay a penalty of 100,000 euros, or $127,000, which will go to charities.
“It wasn’t our task to investigate the reasons for the financial crisis, the role of the banks or the rating agencies,” the presiding judge Brigitte Koppenhoefer said after delivering the verdict. “We simply had to look into whether Mr. Ortseifen violated criminal statutes by the acts he was charged with.”
Mr. Ortseifen faced claims he misled investors by playing down the effect of the U.S. subprime crisis no credit check payday loans. IKB received a bailout package 10 days after the July 20, 2007, press release. It subsequently got as much as 12 billion euros in guarantees from Germany’s bank-rescue fund.
The judge found that the press release was misleading, because it gave the impression that IKB’s exposure to subprime was minor.
Mr. Ortseifen’s lawyer Rainer Hamm had asked for an acquittal and said his client would appeal the conviction.
Prosecutor Nils Bussee had sought the 10-month suspended prison term and an “adequate” penalty.
At the opening of the case in March, Mr. Ortseifen blamed Deutsche Bank for causing IKB’s near-collapse in 2007. Deutsche Bank’s chief executive Josef Ackermann testified at the trial that IKB’s capital base was in peril before Deutsche Bank ended its credit line.
Bloomberg News
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