Whistleblower in Deutsche Bank Case Says He Rejects $8 Million AwardAugust 19, 2016By Aruna Viswanatha WSJ
A whistleblower who is in line to receive $8 million for exposing alleged securities law violations at Deutsche Bank said that he is giving up the award because regulators only fined the company and didn’t go after the managers responsible.
A whistleblower who is in line to receive $8 million for exposing alleged securities law violations at Deutsche Bank AG said on Thursday that he is giving up his award because regulators only fined the company and didn’t go after the managers responsible for the misconduct.
“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 U.S. 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 whistleblower at the time alleged the bank didn’t update the market value of certain credit default swap transactions, known as super senior trades. The whistleblower alleged the bank thus masked mounting losses as the market value sank.
In his op-ed, Mr. 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 $16.5m whistleblower 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 whistleblower program, 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 program 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 on Mr. Ben-Artzi’s op-ed, citing the confidentiality requirements of the whistleblower law. SEC enforcement director Andrew Ceresney said of the Deutsche Bank case: “We brought all of the charges supported by the evidence and the law, which were unanimously approved by the Commission.” A Deutsche Bank spokeswoman declined to comment.
Write to Aruna Viswanatha at Aruna.Viswanatha@wsj.com