In May of last year, Deutsche Bank reached an agreement with the Securities and Exchange Commission (SEC) to settle allegations of improper accounting during the financial crisis. Deutsche paid $55 million to settle the allegations, which were initially brought to the government’s attention by whistleblowers.

Whistleblowers accused Deutsche of concealing the market value of certain credit default swaps – financial contracts in which a seller agrees to compensate the buyer (usually the creditor of the reference loan) if the loan should happen to default. The buyer of the swap makes payments to the seller, and in exchange, receives a payoff if the loan defaults. In essence, a credit default swap thought of as insurance against loan default.

The allegations against Deutsche claim the bank hid mounting losses that were incurred as the market value for these credit default swap transactions sank in the midst of the financial collapse that began in 2008. According to the SEC, a number of people at Deutsche were concerned about inflating the value of these swaps, but those who objected to the alleged wrongdoing were either excluded from making decisions or outright ignored. In the end, Deutsche underestimated risks by between $1.5 billion and $3.3 billion, according to SEC claims.

One of the whistleblowers to come forward and expose Deutsche Bank’s alleged scheme was a man named Eric Ben-Artzi, who worked as a risk officer for the bank. Hired by the bank in 2010, Ben-Artzi said he knew right away that something wasn’t right with the bank’s CDS valuations. He reportedly called an internal Deutsche hotline to express his concerns, then met with the bank’s top compliance attorney, who told him that his concerns should be regarded as confidential. Ben-Artzi objected, and was subsequently fired from the bank. He then went to the SEC and provided details on the bank’s alleged wrongdoing.

Credit Default Swap Whistleblower says SEC should hold Deutsche Execs Accountable

Mr. Ben-Artzi is not your typical SEC whistleblower. For one thing, he chose to make his identity public, which while not unprecedented, is exceedingly rare. Most SEC whistleblowers choose to shield their identity in order to avoid losing their careers in the financial industry. The fact that Ben-Artzi outed himself as a Deutsche Bank whistleblower in order to tell his story, all but ending his career on Wall Street, speaks to both his character and the seriousness of the points he raises.

But perhaps the most unique thing about the Deutsche Bank whistleblower is that he turned down his reward of over eight million dollars because he felt that the SEC did not come down hard enough on the people he claims were responsible for the alleged fraud: Deutsche executives. Instead, the Deutsche Bank whistleblower requested that his share of the whistleblower reward be given to bank stakeholders who he feels were wronged as a result of the bank’s alleged misrepresentations.

In a telling opinion piece published last month in the Financial Times, Mr. Ben-Artzi said the $55 million fine imposed on Deutsche let the bank executives off the hook scot-free, and instead punished the bank’s shareholders and employees, who are now “losing their jobs in droves.”

“Meanwhile, top executives retired with multimillion-dollar bonuses based on the misrepresentation of the bank’s balance sheet. It is therefore especially disappointing that in 2015, after a lengthy investigation helped by many whistleblowers, the SEC imposed a fine on Deutsche’s shareholders instead of the managers responsible,” Ben-Artzi wrote.

Mr. Ben-Artzi’s opinion piece hammers home a couple of critical issues  which are frequently not discussed: the revolving door between Wall Street and the agency policing it; and the SEC’s inclination to fine companies that commit fraud, but not the executives and high officials  who order the fraud or allow it so occur. Ben-Artzi wrote that one of the reasons Deutsche paid such a small fine in relation to the enormity of the allegations against it might have something to do with the bank’s top lawyers having a cozy relationship with the SEC.

Deutsche’s chief lawyer who headed the internal investigation at the bank in 2011 went on to become the SEC’s chief council in 2013. Robert Khuzami, Deutsche Bank’s top lawyer in North America, went on to head the SEC’s enforcement division in the wake of the financial crisis. Richard Walker, the bank’s longtime general council, was once the head of enforcement at the SEC (Walker only recently left the bank in 2016). The current head of the SEC, Mary Jo White, has known both Khuzami and Walker for as long as 20 years.

Of course, this incestuous relationship between Wall Street and the agency charged with policing it isn’t limited to Deutsche Bank. According to Business Insider, a former Fed employee admitted last year to leaking confidential government information to a banker from Goldman Sachs.

The Wall Street Journal published a story earlier this year analyzing 156 civil and criminal proceedings brought by the Justice Department and the SEC over the last seven years against the 10 largest Wall Street banks. Less than 19 percent of those cases identified or charged an individual for any wrongdoing.

This stand taken by Mr. Ben-Artzi is an important one—unless we punish the high level executives responsible for financial fraud, it will continue. A fine of $55 million for a large Wall Street bank might seem like a lot of money to us, but is at best a slap on the wrist for a company like Deutsche Bank.

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