Mr Ben-Artzi was one of three former Deutsche Bank employees who blew the whistle in 2010 and 2011 about the way the company was valuing its portfolios of assets. In an op-ed published by the Financial Times this week, Mr Ben-Artzi recalls approaching regulators to inform them of the internal accounting irregularities at the bank: ‘[My] colleagues at the bank had been inflating the value of its massive portfolio of credit derivatives,’ he said. An SEC investigation into irregularities at Deutsche Bank eventually resulted in a $55m fine imposed against it in May last year, which an attorney for the SEC has called the only enforcement action of its kind against a major financial institution.

Whistleblower award refusal

Under the terms of the SEC whistleblower program, Mr Ben-Artzi is entitled to collect 15 per cent of the award against Deutsche Bank alongside his fellow whistleblowers. His personal portion of this award has been calculated by the SEC as $8 million. However, Mr Ben-Artzi is refusing to accept the payout, which he feels should punish management rather than shareholders. ‘[T]op executives retired with multimillion-dollar bonuses based on the misrepresentation of the bank’s balance sheet’ while ‘the bank's shareholders and rank-and-file employees who are losing their jobs in droves’ are baring the burden of the penalty, he argues.

Lawyers to blame

Most likely to ruffle feathers among Mr Ben-Artzi’s claims is that a ‘revolving’ relationship between top lawyers at Deutsche Bank and the SEC may be to blame for the fact that the SEC penalty landed hardest on shareholders, rather than management. His op-ed names several former and current Deutsche Bank legal elites who hold or have held senior positions at the SEC, including Robert Rice, the chief later in charge of the internal investigation at Deutsche Bank in 2011 who in 2013 became chief counsel at the SEC. Deutsche Bank’s longtime general counsel Richard Walker was also once head of enforcement at the SEC. ‘In this case, top SEC lawyers had held senior posts at the bank, moving in and out of top positions at the regulator even as the investigations into malfeasance at Deutsche were ongoing,’ says Mr Ben-Artzi. He has said he will accept his $8m award once the amount is ‘clawed back from the bonuses paid to Deutsche executives, especially the former top SEC attorneys’ rather than shareholders.

Sources: Financial Times; BigLaw Business