Deutsche Bank Post-Crisis Mortgage Positions Probed by SEC

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Deutsche Bank Post-Crisis Mortgage Positions Probed by SEC

The U.S. Securities and Exchange Commission is investigating whether Deutsche Bank AG inflated the value of securities in its mortgage-bond trading business and masked losses around 2013, according to people with knowledge of the matter.

Investigators are looking at positions overseen by Troy Dixon, who at the time ran the bank’s trading for U.S. government-backed mortgage bonds known as agency pass-throughs, said the people. The SEC is asking whether the bank delayed recording losses on those securities over an extended period of time, said the people, who asked not to be identified because the matter is private.

“We are cooperating with this investigation, which is looking into previously recognized losses on certain positions,” said Amanda Williams, a spokeswoman for Deutsche Bank. She declined to comment further. Dixon and an SEC spokeswoman declined to comment.

Losses from the securities could have run into the hundreds of millions of dollars, separate people with knowledge of the matter said. Any delays in writing down bonds may have bolstered the bank’s earnings for at least a few quarters in 2013, when fixed-income markets cratered after then-U.S. Federal Reserve Chairman Ben S. Bernanke started talking about the Federal Reserve slowing its program of quantitative easing.

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