Chief Executive Carsten Kengeter is suspected of purchasing Deutsche Börse stock based on insider knowledge that the marketplace operator would enter into merger negotiations with the London Stock Exchange.

Deutsche Börse's CEO Carsten Kengeter.

Authorities searched the offices of Deutsche Börse's headquarters in Eschborn near Frankfurt on Wednesday on suspicion of possible insider trading due to a €4.5 million ($4.85 million) purchase of Deutsche Börse shares by CEO Carsten Kengeter, whose home in Frankfurt was also searched.

Four state prosecutors, 10 police investigators and several officials from Germany's financial regulator, BaFin, participated in the search, according to a report from Handelsblatt's sister publication WirtschaftsWoche.

Mr. Kengeter purchased and declared the stock in December of 2015. A month later, he signed a non-disclosure agreement about the plans to merge with the London Stock Exchange (LSE).

"The initial suspicion results from talks held by the management of Deutsche Boerse and the London Stock Exchange between July/August and December 2015 that centered on a possible merger of the two companies and the question of where the holding company could be based," the Frankfurt prosecutor's office said in a statement on Thursday.

The two exchange operators only confirmed they were in negotiations for a merger in February 2016.

The investigations against Mr. Kengeter were launched due to two criminal charges, a spokeswoman of the prosecutor's office said on Thursday in Frankfurt. One was made by an investor, the second was submitted anonymously.

Deutsche Börse's supervisory board Chairman Joachim Faber backed Mr. Kengeter late on Wednesday, saying the prosecutor's suspicion was "groundless". LSE welcomed Mr. Faber's support and said it looked forward to completing the planned merger between the two companies.

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