A former Deutsche Bank risk officer has refused his share of a $16.5 million award from the Securities and Exchange Commission (SEC) for reporting misdeeds.
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Former risk manager Eric Ben-Artzi, who went to federal authorities in 2010 after he was sacked from Deutsche Bank for alerting its officials of improper accounting, said the bank and the SEC were so deeply entwined in a revolving-door culture that commissioners refused to properly investigate the firm’s top executives.
The former Deutsche Bank AG risk offer who blew the whistle on the lender overvaluing a derivatives portfolio has turned down an $8.25 million (€7.3m) award for his efforts.
He expressed his disappointment that “after a lengthy investigation helped by multiple whistleblowers, the SEC imposed a fine on Deutsche’s shareholders instead of the managers responsible”.
The whistleblower award was launched by SEC in 2011 to encourage people with insider knowledge to speak about financial crimes.
“But Deutsche did not commit this wrongdoing”, Ben-Artzi says.
“Deutsche was the victim”, he wrote.
The “bank’s shareholders and rank-and-file employees who are now losing their jobs in droves” were the “primary victims”, Ben-Artzi said.
“At the height of the financial crisis, Deutsche Bank’s financial statements did not reflect the significant risk in these large, complex, illiquid positions”, SEC enforcement chief Andrew Ceresney said at the time. “Their boss, Richard Walker, the bank’s longtime general counsel (he left the bank this year) was once head of enforcement at the SEC”.
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.
Mr Khuzami could not be immediately reached for comment. He was then Deutsche’s top lawyer for compliance and regulatory affairs, and asserted that our conversations were subject to attorney-client privilege and could not be disclosed.
Ben-Artzi added: “We must protect shareholders from executive wrongdoing”. “I never meant to turn a job in risk management into a crusade”.
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Ben-Artzi suggested that the government didn’t go after the bank’s top executives because of conflicts of interest, and that if the money for his award was clawed back from their bonuses, he would be happy to accept it.
