SEC Division of Corporation Finance no-action letter: Deutsche Bank AG

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

June 16, 2009 DIVISION OF
CORPORATION FINANCE
Mr. Christian J. Mixter
Morgan, Lewis & Bockius LLP
1111 Pennsylvania Avenue, NW
Washington, D.C. 20004
Re: SEC v. Deutsche Bank Securities, Inc.-- Waiver Request of Ineligible Issuer Status under Rule 405 of the Securities Act by Deutsche Bank AG Dear Mr. Mixter:
This is in response to your letter dated June 16,2009, written on behalf of your client Deutsche Bank AG ("Company") and its subsidiary Deutsche Bank Securities, Inc. ("DBSI") and constituting an application for relief from the Company being considered an "ineligible issuer" under Rule 405(1)(vi) ofthe Securities Act of 1933 ("Securities Act"). The Company requests relief from being considered an ineligible issuer under Rule 405, arising from the settlement of a civil injunctive proceeding with the Commission. The Commission filed a civil injunctive complaint against DBSI in the United States District Court for the Southern District ofNew York alleging that DBSI violated Section 15(c) of the Securities Exchange Act of 1934 ("Exchange Act"). DBSI filed a consent in which it agreed, without admitting or denying the allegations ofthe Commission's Complaint, to the entry of a Final Judgment against it. Among other things, the Final Judgment as entered on June 9,2009, permanently enjoins DBSI from violating Section 15(c) ofthe Exchange Act. Based on the facts and representations in your letter, and assuming the Company and DBSI comply with the Final Judgment, the Commission, pursuant to delegated authority has determined that the Company has made a showing of good cause under Rule 405(2) and that the Company will not be considered an ineligible issuer by reason ofthe entry of the Final Judgment. Accordingly, the relief described above from the Company being an ineligible issuer under Rule 405 ofthe Securities Act is hereby granted and the effectiveness ofsuch relief is as ofthe date ofthe entry ofthe Final Judgment. Any different facts from those represented or non-compliance with the Final Judgment might require us to reach a different conclusion. Sin~erely, TrliiVt 1~t6 Mary Kosterlitz Chief, Office ofEnforcement Liaison Division ofCorporation Finance

Morgan. Lewis & Bockius LLP
1111 Pennsylvania Avenue, NW
Washington, DC 20004
Tel: 202.739.3000
Morgan Lewis COUNSELORS AT LAW
Fax: 202.739.3001 www.morganlewis.com
ChristIan J. Mixter
Partner
202.739.5575 cmixter@morganlewis.com
June 16, 2009
VIA E-MAIL AND HAND DELIVERY
Mary J. Kosterlitz, Esquire
Chiefofthe Office ofEnforcement Liaison
Division of Corporation Finance
U.S. Securities and Exchange Commission
100 F. Street, NE
Washington, DC 20549-0310
Re: Deutsche Bank AG
Dear Ms. Kosterlitz:
On behalfof our client Deutsche Bank AG. ("Deutsche Bank"), we hereby respectfully request a waiver of any "ineligible issuer'" status that may arise pursuant to Rule 405 ("Rule 405") promulgated under the Securities Act of 1933 ("Securities Act") with respect to Deutsche Bank as a result of a settlement between Deutsche Bank Securities Inc. ("DBSI"), an indirect wholly￾owned subsidiary of Deutsche Bank, and the Securities and Exchange Commission ("Commission"). The settlement resulted in the issuance of a Judgment that is described below. We respectfully request that this waiver be granted effective as ofthe date ofthe entry ofthe Judgment. It is our understanding that the Staffofthe Division ofEnforcement (the "Staff') does not object to the grant of the requested waiver. BACKGROUND The Staff engaged in settlement discussions with DBSI in connection with the investigation described above. DBSI submitted an executed Consent, solely for the purpose ofproceedings by or on behalfofthe Commission, which consented to the entry of a Judgment (the "Judgment"). The Judgment was entered on June 9, 2009. See Securities Offering Refonn, 70 Fed. Reg 44, 772; 44,810-811 (Aug. 3, 2005) (codified at 17 C.F.R., pt. 230.405). D81/62860283.5

Morgan Lewis COUNSELORS AT LAW Mary Kosterlitz, Esquire June 16,2009 Under the Judgment, entered, in part, pursuant to Sections 21(d)(l), 21(e), 21(f), and 27 ofthe Exchange Act, DBSI is enjoined from violating Section 15(c) ofthe Exchange Act, 15 U.S.C. § 780(c). The Commission's Complaint alleged, without admission or denial by DBSI, that DBSI misled its customers about the fundamental nature and increasing risks associated with ARS that it underwrote, marketed and sold. The Complaint further alleged that DBSI, through client advisers, marketing materials, and account statements, misrepresented ARS to its customers as safe, highly liquid investments comparable to cash or money market instruments, and that DBSI reinforced this perception by committing its own capital to support ARS auctions for which it served as the lead manager to ensure that those auctions did not fail. The Judgment permanently enjoins DBSI from engaging in violations ofSection 15(c) ofthe Exchange Act, requires it to comply with the undertakings specified in the Judgment, and provides that DBSI may be required to pay civil monetary penalties pursuant to Section 21(d)(3) ofthe Exchange Act. DISCUSSION Securities Act rules, which were adopted and amended effective December 1, 2005, provide substantial benefits to issuers classified as a "well-known seasoned issuer" ("WKSI"), including the use of a streamlined automatic shelf registration process and exemption from "quiet period" restrictions prohibiting communication during the 30-day period prior to the filing of a registration statement. 2 The new rules also permit most other issuers to use a "free writing prospectus" after a registration statement is filed to communicate information about a registered offering ofsecurities.3 However, these benefits are unavailable to issuers who are excluded from the WKSI definition, and therefore such issuers may not use automatic shelfregistrations or make communications within 30 days prior to filing a registration statement.4 Similarly, the rules prohibit ineligible issuers from using post-filing free writing prospectuses.s An issuer is an ineligible issuer for the purposes of Rule 405 if, among other things, [w]ithin the past three years ... the issuer or any entity that at the time was a subsidiary ofthe issuer was made the subject of any judicial or administrative decree order arising out of a governmental action that: (A) Prohibits certain conduct or activities regarding, including future violations of, the anti-fraud 2 See Rule 405 (defmition of "well-known seasoned issuer"); id. (deflnition of "Automatic shelfregistration statement"); Securities Offering Reform, 70 Fed. Reg. 44, 772; 44,805-806 (Aug. 3, 2005) (codifledat 17 C.F.R. pt. 230.163 & 163A) ("Rule 163"). Securities Offering Reform, 70 Fed. Reg. 44,772; 44,806-807 (Aug. 3,2005) (codifled at J7 C.F.R. pt. 230.164) ("Rule 164"). The new rules permit WKSls to use a free writing prospectus before a registration statement is
filed as well. Rule 163. 4 See Rule 405 (definition of "Well-known seasoned issuer," para. (iii». See Rule 164. OB1/62860283.5

Morgan Lewis COUNSELORS AT LAW Mary Kosterlitz, Esquire June 16,2009 provisions ofthe federal securities laws; (B) Requires that the person cease and desist from violating the anti-fraud provisions of the federal securities laws.6 Ineligible issuer status may be waived if"the Commission determines, upon a showing of good cause that it is not necessary under the circumstances that the issuer be considered an ineligible issuer.,,1 The Commission has delegated to the Division of Corporation Finance the authority to grant or deny applications requesting that an issuer not be considered an ineligible issuer as defined in Rule 405. 8 Accordingly, Deutsche Bank hereby requests a waiver, effective as ofthe date ofthe entry of the

Judgment, of any ineligible issuer status that may arise under Rule 405 as a result ofthe entry of

the Judgment. 9 We do not believe that the protection ofinvestors or the public interest would be

served by denying Deutsche Bank the benefits afforded by the Securities Act to issuers that are

not classified as ineligible issuers. The SEC's case, which resulted in the Judgment, does not

relate in any way to any public disclosures by Deutsche Bank. Accordingly, Deutsche Bank

should be determined not to be an "ineligible issuer" within the meaning of Rule 405.

In light ofthe grounds for relief discussed above, we believe that Deutsche Bank has shown

good-cause that reliefshould be granted. Accordingly, we respectfully urge the Division of

Corporation Finance to grant a waiver, effective as of the date of the entry of the Judgment, of

any ineligible issuer status with regard to Deutsche Bank that may arise pursuant to Rule 405.

If you have any questions regarding this request, please contact the undersigned at 202.739.5575. Very truly yours, ~.~ cc: Andrew Weinberg, Esquire, DBSI 6 Rule 405 (definition of "Ineligible issuer," para (l)(vi)). 1 [d. (definition of "Ineligible issuer," para (2)). Securities Offering Reform, 70 Fed. Reg. 44,772; 44,798-799 (Aug. 3, 2005) (codified at 17 C.F.R. pt. 200.30 1(a)(lO). Deutsche Bank reserves all rights to claim that this disqualification provision is imipplicable. 081162860283.5