Whistle-blower in Deutsche case rejects $8m award


“I will not join the looting of the very people I was hired to protect,” the whistleblower Eric Ben-Artzi said in an unusual op-ed in the Financial Times entitled “We must protect shareholders from executive wrongdoing”.

In May, the bank agreed to pay $ 55 million to settle US Securities and Exchange Commission allegations that it hid paper losses of more than $ 1.5 billion during the financial crisis. The agency didn’t charge any executives in connection with the case.

A whistle-blower at the time alleged the bank didn’t update the market value of certain credit default swap transactions, known as super senior trades. The whistle-blower alleged the bank thus masked mounting losses as the market value sank.

In his op-ed, Ben-Artzi said he had been a risk officer at Deutsche Bank and one of three whistleblowers who reported the practice to the bank and to regulators. He wrote that he “just got word” from the SEC that he is to receive “half of a $ 16.5 million whistle-blower award.”

He said he was refusing it and asked that it “be given to Deutsche and its stakeholders, and the award money clawed back from the bonuses paid to the Deutsche executives”.

The SEC whistle-blower programme, put in place in 2011 as part of the Dodd-Frank financial-overhaul law, allows tipsters to collect between 10% and 30% of any penalties the government collects. The programme is shrouded in secrecy, and the agency provides few details on the awards it grants other than the rough amount. It doesn’t identify the case in which any award was granted.

An SEC spokesman declined to comment, citing the confidentiality requirements of the whistle-blower law. A Deutsche Bank spokeswoman wasn’t immediately available for comment.

Write to Aruna Viswanatha at Aruna.Viswanatha@wsj.com

This article was first published by The Wall Street Journal

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