A former Deutsche Bank AG risk officer said he was refusing an $8.25 million reward from the Securities and Exchange Commission for blowing the whistle on the lender overvaluing a derivatives portfolio, because of his concern that the SEC didn’t go after senior executives.
The $55 million fine that Deutsche Bank paid in a settlement announced by the SEC in May last year had penalized shareholders, while top executives retired with their multi-million dollar bonuses intact, Eric Ben-Artzi wrote in a Financial Times column published Friday.
A Deutsche Bank spokeswoman, Amy Chang, said in Hong Kong that the lender had no comment. An SEC spokesman didn’t immediately reply to a message requesting comment outside of business hours.
The SEC said last year that Deutsche Bank misstated financial reports during the height of the global financial crisis, failing to take into account a material risk for potential losses estimated to be in the billions of dollars. The lender overvalued a portfolio of derivatives through which the bank purchased protection against credit default losses.
No ‘Looting’
Ben-Artzi, a mathematician who formerly worked for Goldman Sachs Group Inc., said he didn’t want his share of a $16.5 million payout because "I will not join the looting of the very people I was hired to protect.” His said his ex-wife and his lawyers had claims to a “portion” of the money, without being more specific.
The probe involved the cooperation of financial authorities in Germany and the U.K., the SEC said last May.
“At the height of the financial crisis, Deutsche Bank’s financial statements did not reflect the significant risk in these large, complex illiquid positions,” Andrew J. Ceresney, director of the SEC’s enforcement division, said when the penalty was announced. “Deutsche Bank failed to make reasonable judgments when valuing its positions and lacked robust internal controls over financial reporting.”
By: Paul Panckhurst (Bloomberg News).
Photo: Zero Hedge.
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