Deutsche quits Hertz float after e-mail gaffe
Thursday 09 November 2006
Deutsche Bank has been forced to withdraw as an underwriter to one of the biggest US flotations of the year, after sending inappropriate e-mails about the deal to its institutional investor clients.
The German banking giant will miss out on millions of dollars in fees from the $1.5bn share sale by Hertz, the car rental business which used to be part of Ford and which is likely to be valued at more than $15bn (£7.8bn).
The bank fell foul of Wall Street's tough rules on how to market shares in a flotation, which are designed to ensure all potential investors get the same information at the same time.
Hertz said yesterday that Deutsche had been dropped after the discovery of e-mails to 175 clients that might "constitute a prospectus not meeting the requirements of the Securities Act". If the investors buy Hertz shares based on the incomplete information, the company could be liable to buy back the stock.
A Deutsche Bank spokesman said: "After reviewing the e-mails in question, we determined it would be best for our client if we took an extremely cautious approach, so we resigned our role in the offering."
Deutsche had been in the second tier of nine investment banks handling the flotation. The bank declined to say whether it was disciplining the employee who sent the e-mails two weeks ago.
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