The SEC said Deutsche Bank had acted improperly

Deutsche Asset Management recommended its customers should vote in favour of last year's merger of the computer giants.

But the US financial watchdog claims the bank neglected to tell its clients that one of its investment divisions was working for Hewlett Packard (HP) at the time.

HP paid Deutsche Bank $1m for "market intelligence" during the takeover, with another $1m to be awarded on the deals' success.

Deutsche Asset Management's vote eventually helped HP succeed in its $18bn takeover of Compaq, despite the best efforts of the HP family to block the deal.

Lead dissident Walter Hewlett filed a lawsuit accusing HP of effectively bribing Deutsche Bank to vote for the deal.

Mind change

Deutsche Asset Management initially voted to put all 17 million proxies of HP stock against the deal, but later changed its mind and voted in favour of the deal.

The US Securities and Exchange Commission (SEC) did not conclude that the conflict of interest had affected the vote, but said Deutsche Bank had acted improperly in not telling its clients the full story.

HP said the settlement did not concern the conduct of HP or any of its offices.

The German bank said it had been cleaning up its corporate governance procedures, even before the fee was paid.

It paid to settle the charges without admitting or denying it was guilty.