Deutsche Bank E-Mail Probe Widened

California regulators, continuing an investigation of alleged Wall Street abuses, said Thursday that they had hired a data-recovery firm to find out whether missing e-mails requested from Deutsche Bank resulted from carelessness or intentional acts.

If it’s the latter, the Department of Corporations may refer the case to California Atty. Gen. Bill Lockyer for prosecution, a department official said.

An obstruction-of-justice case “is a possibility,” Deputy Corporations Commissioner Andre Pineda said. “There are e-mails that Deutsche Bank is characterizing as unrecoverable. So we have sent those [tapes that held the e-mails] to an outside firm, not only to find out whether restoration is possible but whether they were systematically erased, whether it was more than just sloppiness.”

Deutsche Bank Securities, the investment banking arm of the German bank, is among a dozen Wall Street firms investigated by federal and state regulators for possible conflicts of interest involving stock analysts. But it was not one of the 10 firms that recently paid $1.4 billion to settle the case, because of California’s probe after the firm disclosed last month that nearly a third of the e-mails sought by regulators had been lost.

Deutsche Bank has said the erasures were inadvertent.

Pineda said his agency wasn’t satisfied with explanations by Deutsche Bank information technology specialists of how the erasures went undetected for months. He said the firm acknowledged that the e-mails were missing only after regulators repeatedly raised that possibility.

The department has hired Zantaz Inc. of Pleasanton, Calif., to examine Deutsche Bank’s backup tapes and is scheduling interviews with attorneys at Fried Frank Harris Shriver & Jacobson, the law firm that Deutsche Bank used in passing along evidence to regulators, Pineda added.

“We definitely did not get a satisfactory explanation from the IT folks, so we’re looking to depose the outside counsel,” he said.

Contacted by Reuters, a Deutsche Bank spokeswoman read a statement that said, “In response to inquiries earlier this year from the California Department of Corporations concerning the completeness of our e-mail production, we discovered that we inadvertently did not produce all relevant e-mails.

“Deutsche Bank has cooperated fully with regulators to correct this oversight.”