Securities and Exchange Commission (SEC) whistleblower, Dr. Eric Ben-Artzi, is alleging multi-billion dollar securities violations at Deutsche Bank, an investment bank located in Germany. Dr. Ben-Artzi is a former Quantitative Risk Analyst at Deutsche Bank. He initially attempted to report the violations to superiors at Deutsche Bank, but was ignored and ultimately terminated after disclosing information to the SEC. Dr. Artzi alleges Deutsche Bank attempted to hide as much as $12 billion in losses from its investors.
Details of Securities Violations
SEC whistleblower, Dr. Ben-Artzi discovered that between the years of 2007 and 2010, Deutsche Bank failed to properly value the credit derivatives held by the bank, attempting to make consumers believe they were weathering the economic crisis much better than competitors were. Deutsche Bank held a portfolio of between $120 and $130 billion of these so-called Leveraged Super Senior (“LSS”) tranches of derivatives and was the largest holder of LSS trades in the business. By not accurately valuing the LSS trades, the bank was able to maintain its public image and avoid a significant drop in the value of their stock prices. Countless investors were harmed by the bank’s material misrepresentations.
“I never wanted or expected to be a whistleblower. I reported internally first and extensively, in accordance with bank policies and procedures,” said Dr. Artzi. “As the problem was not acknowledged or corrected, I felt compelled to inform the proper law enforcement authorities. Unfortunately, my family and I are paying a heavy price for doing the right thing.”
After reporting the possible violations internally and being ignored, Dr. Artzi became extremely troubled by the bank’s unwillingness to address the problem. He then sought out a whistleblower attorney and officially reported the violations to the SEC through their Whistleblower Program.
In addition to filing a report with the SEC, Dr. Artzi also filed a complaint with the Department of Labor (DOL) alleging he experienced retaliation after reporting the concerns to his supervisors at Deutsche Bank. According to GAP, after Dr. Artzi expressed concern of possible securities violations outside the direct chain of command, he was subjected to extreme workplace hostility, shunned by his peers, denied access to records that were necessary to properly perform his job and was essentially stripped of all previous responsibilities. In November 2011, Deutsche Bank told Dr. Artzi that his position with the company had been moved to Europe and he was laid off without warning. Deutsche Bank also refused to give Dr. Artzi the option of moving with his job or finding a new position within the bank.
“The size of the misconduct is shocking and it is an example of why the SEC Whistleblower Program was put into place,” said Shauna Itri, a Whistleblower Attorney at Berger Montague
Protection of the Dodd-Frank Act
Under the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (“Dodd-Frank”), whistleblowers that voluntarily provide original information about securities violations are entitled to a monetary reward between 10 and 30 percent of the total recovery in cases that are over $1 million. The SEC whistleblower program has an extremely broad reach and offers potential whistleblowers significant employment protections, monetary awards and the ability to report their concerns anonymously. In addition to the monetary incentives provided by the Dodd-Frank Act, corporate whistleblowers are also protected from workplace retaliation. Under Dodd-Frank, as long as an employee reasonably believes their employer is engaging in acts of fraud or violation of securities laws, they are free to report those concerns without fear of retaliation in the workplace. As long as the employee’s belief is reasonable, the employer cannot retaliate against the employee for speaking out, even if the belief ultimately proves to be wrong.