The testimony coming out today in the Delaware Court is very damaging to DB's business judgement and ethics.
It is clear from sworn testimony that DB Asset Management changed its vote in the HP Compaq merger proxy fight at the very last moment on March 19, 2002 from AGAINST to FOR based on entirely on past and future business consideration received with Hewlett-Packard.
This is obviously a serious conflict of interest situation and a breach of fuduciary responsibility.
DB accepted a $1-million dollar consulting fee from Hewlett-Packard plus an additional $1-million bonus if the proxy vote for the merger was approved. On top of those direct fee payments, DB also was awarded a portion of the HP retirement fund to manage and the financing of a $4-billion loan to Hewlett-Packard. All of this very lucrative new business from Hewlett-Packard was awarded to DB clearly for the purpose of influencing the vote of DB's 25-million proxy votes in favor of the HP-Compaq merger.
A last minute telephone call from HP's CEO, Carly Fiorina, just one hour before the vote deadline was clearly a veiled threat that DB had better switch its proxy votes in favor of the HP-Compaq merger or risk future business dealings with Hewlett-Packard.
DB evidently switched its votes as a result of this business relationship---and that is clearly a conflict of interest as well as a violation of DB's fudiciary responsibilities to its Asset Management clients.
This will be VERY VERY DAMAGING to DB's business reputation, its standing with the SEC, credibility with DB's asset management clients, and is definitely grounds for future criminal action against DB.
There is no question that DB has acted very irresponsibly and probably also illegally in this Hewlett-Packard affair. It is obvious now from the HP trial evidence before the Delaware court that there is really no air-tight "Chinese Wall" between DB's various business and asset management units. It is also evident that DB management has acted in a very irresponsible, unethical and prejudicial manner that has materially harmed HP stockholders as well as DB's own investors.
There are certainly grounds here for further SEC actions and penalties against DB.
There may even be sufficient grounds for a class action law suit by DB Asset Management clients against DB management [Messrs BARR, GRISWOLD, etc.].
This all adds up to BIG, BIG, BIG trouble ahead for Deutche Bank, its management and its investors too.
Watch out. You haven't heard the last of this smelly mess yet!