Deutsche Bank whistleblower spurns award, urges SEC pursuit | News | DW | 19.08.2016
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Deutsche Bank whistleblower spurns award, urges SEC pursuit

A former Deutsche Bank employee has rejected an $8 million award. Whistleblower Eric Ben-Artzi said he wants the US Securities and Exchange Commission to punish "managers responsible" for inflated derivative pricing.

The "Financial Times" (FT) said Friday's opinion piece written by the banking risk specialist Ben-Artzi gave a "rare window" into how the US Security and Exchange Commission (SEC) handled whistleblowers in the wake of the global 2008 financial crisis.

Ben-Artzi wrote he refused to take his half share of a $16.5 million (14.6 million euros) SEC "award," saying although he needed the money, "I will not join the looting of the very people I was hired to protect."

The money equates to 15 percent of a $55-million fine the SEC imposed on Deutsche Bank in May 2015 for overvaluing a $120 billion portfolio of so-called credit derivatives by at least $1.5 billion.

Reuters news agency reported Friday that Ben-Artzi's accusations had been rejected by the SEC's enforcement chief Andrew Ceresney.

Reuters quoted Ceresney as saying that the authorities had submitted all violations that could be proven to prosecution.

Bonuses instead of penalties?

Risk officer Ben-Artzi, who joined Deutsche Bank in 2010, said he was later fired for disclosing "malfeasance" internally and demanded that the SEC pursue several top executives who had "retired with multimillion-dollar bonuses."

The "bank's shareholders and rank-and-file employees who are now losing their jobs in droves" were the "primary victims," Ben-Artzi said.

"I request that my share of the award be given to Deutsche [staff] and its shareholders," he wrote in the FT.

Ben-Artzi cited two inquiries involving two smaller US banks where "similar" but smaller violations had led to one fine and litigation against other executives.

'Revolving door'

Ben-Artzi charged that the SEC had failed to pursue three senior legal executives formerly at the Deutsche Bank because of the so-called "revolving door" between banks and the supervisory agency.

They had "revolved" in and out of the SEC before, during and after the activity that led to the fine, he said.

'Systematically plundered'

The German magazine "Focus" claimed in an in-depth article in its July 30 edition that Deutsche Bank was "systematically plundered" over 15 years, starting in the late 90s.

Deutschland PK Deutsche Bank John Cryan

John Cryan is bringing the bank though a restructuring program

It had lost its integrity as it drifted from being German industry's "house bank" to what one of its former supervisory board members, Ulrich Cartellieri, had called a "hedge fund with an attached payment office," "Focus" said.

Tough restructuring

Deutsche Bank's new chief executive, John Cryan, is currently pursuing a tough restructuring. His plan would cut 9,000 jobs worldwide by 2020. Its share price has fallen to around 10 percent of its pre-crisis value.

"Focus" said that 20 years ago Deutsche Bank was the world's "second-largest bank," whereas "today it's listed in 54th place."

ipj/sms (Reuters, AFP)

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