Danske Bank fined €1.2m for hiding negative return risk to fund clients

On the 11/04/20 at 10:38AM


Adrien Paredes-Vanheule

The Danish financial firm was under investigation since September 2019.

Danske Bank has been fined DKK 9m (€1.2m) on Monday by the Danish State Prosecutor in charge special economic and international crime for the provision of misleading information to the clients of one of its funds, Flexinvest Fri.

The financial institution did not inform them that negative net returns were to be expected in that multi-asset fund - returns eventually turned negative - while the bank continued to sell the product to new retail customers without informing them about the expected negative net return despite Danske Bank was aware of such risk. The investigation was ongoing since Danske Bank had been reported to the Prosecutor in September 2019 by the Danish financial supervisory authority.

It is the first time in the country that the breaching of investor protection rules leads to a sanction for the concerned institution. Jasper Berg, director of the Danish FSA, said: "It is important for citizens and investors' confidence in the financial sector to trust that banks act in the best interests of customers (...) With that decision, we send an important signal that shows financial companies what it costs to break the rules."