“Massachusetts securities regulators fined a unit of Deutsche Bank AG $17.5 million for failing to disclose conflicts of interest that arose from its various roles related to a $1.56 billion mortgage product known as Carina.

“In a statement, Massachusetts Secretary of the Commonwealth William Galvin said Deutsche Bank Securities Inc. failed to supervise its employees who “knew but failed to disclose” such conflicts concerning the collateralized debt obligation, known as a CDO. The investigation into such conduct centered on a Deutsche Bank proprietary trading desk called the Special Situations Group.

“The bank was censured and agreed to cease and desist from conduct violating the state’s Securities Act. A Deutsche Bank spokesman said, “We are pleased to have reached this settlement and put this matter behind us.”

“Mr. Galvin’s office said the Special Situations Group created a “co-investment CDO proposal” with hedge fund Magnetar Capital LLC, one of six such products that the two invested in together, totaling $10 billion.”

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