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Deutsche Bank Whistle-Blower Spurns $8M SEC Reward
- deegles 10y agoWhy not use the money to fund a lawsuit to get the results he wants?
- Zenst 10y agoMaybe his comment “I will not join the looting of the very people I was hired to protect.” explains that.
- deegles 10y agoRight, but didn't the bank still have to pay the money?
- jlarocco 10y agoIf the bank didn't have to pay the fine, the money would have went to the shareholders. But it was the shareholders who were being defrauded in the first place that made the guy become a whistle blower. The crooked executives got their bonuses and didn't have to pay a fine.
- nathangrant 10y agoHe was whistleblowing on Deustche bank taking advantage of their shareholders, and in turn is being paid out of a fine that they had to pay (which, of course, comes from the shareholders themselves not the accused execs) so it's a bit of a perverse incentive for him. The rest of us can stand jaw-dropped at turning down a massive sum of money, but bravo to him for pointing this out with his (seemingly selfless) action here.
- guardiangod 10y agoHere is the whistle-blower's opinion piece on FT- http://www.ft.com/cms/s/0/b43d2d96-652a-11e6-8310-ecf0bddad227.html http://www.ft.com/cms/s/0/b43d2d96-652a-11e6-8310-ecf0bddad2... Although I need the money now more than ever, I will not join the looting of the very people I was hired to protect. I never intended to turn a job in risk management into a crusade, but after suffering at the hands of the Deutsche executives I will not join them simply because I cannot beat them. I request that my share of the award be given to Deutsche and its stakeholders, and the award money clawed back from the bonuses paid to the Deutsche executives, especially the former top SEC attorneys. I would then be happy to collect any award for which I am eligible.
- kazinator 10y agoBasically he seems to be saying that when the SEC impose a fine on thieves, they are just meta-thieves: thieves robbing thieves, who effectively participating in the original looting by proxy, rather than helping.
- deleted 10y ago[deleted]
- Dobbs 10y agoI took it differently. If the fine was coming from the executives paychecks he wouldn't be opposed to it. But as it stands the fine is coming from the shareholder's pockets who have already been stolen from. So all he would be doing is becoming a thief in addition to the executives.
- kazinator 10y agoYes; that's what I mean. First move the stolen goods back to the victims from the robbers. Then apply any additional penalty.
- MarkMc 10y ago> Although I need the money now more than ever, I will not join the looting of the very people I was hired to protect. I'm impressed by this man's character. Not many people would give up $8 million to which they are legally entitled.
- sfrailsdev 10y agoWealthy people benefit at every step of the legal process. If the sec did this, had bonuses being used to pay fines, people would buy insurance against it, and the insurers would pay it if and when it happened. Maybe that would be helpful as insurers would want to do due diligence. But I'm not at all sure that's a solution.
- dogma1138 10y agoMost insurance policies have quite a few clauses under which the insurance won't be paid out fully or at all. For example you can't take out an insurance policy on your house and set it on fire and claim the insurance afterwards. Life insurance policies usually have an "under suspicious circumstances" or "self inflicted death" clauses that restrict the payout of the policy as well as the usual "in good faith clause" so if you have a life threatening condition and you hid it from the insurer you can kiss your policy goodbye. Insurance policies that provide coverage in case of loss of work exist but those are limited to conditions in which you lost your work due to a health issue, got fired etc. and you usually have to meet pretty strict conditions to get any payout from the policy. A CEO can most likely find some insurance company to cover their compensation package but you'll be your ass there will be a "fraud" or "gross incompetence" clause in it that would prevent them seeing a penny.
- deleted 10y ago[deleted]
- greenleafjacob 10y agoIn general this is called adverse selection, and to the extent that the insured can affect the probability of the loss, the risk is not insurable so these clauses are existentially necessary for the insurer [1]. [1]: https://en.wikipedia.org/wiki/Insurable_risk https://en.wikipedia.org/wiki/Insurable_risk
- sfrailsdev 10y agoHmm... but they never admit wrong-doing, fraud or anything they just pay to settle. And the pay out would only be if the SEC or other government body actually went after them. I'm reasonably sure there would be a way, and even if it was a bad bad investment for the insurer to take directly, it could be wrapped in derivatives and chopped up and sold to institutional investors. But perhaps I'm just cynical.
- lifeisstillgood 10y agomost interesting is that he compares deutsche to a smaller firm that committed similar crimes (Trinity Capital). There executives are held liable and fined. At deutsche, where SEC senior lawyers and deutsche senior lawyers have revolving doors, find the company not the execs. that (which would help prevent moral hazard) seems to be his redline
- cloudjacker 10y agoWhere is the Netflix documentary that goes deeper into this pattern how about John Oliver
- joeyo 10y ago> He said his ex-wife and his lawyers had claims to a > “portion” of the money, without being more specific. I imagine his lawyers (and ex-wife?) will be a little annoyed.
- mendelsd 10y agoNo, they get to keep their portion.
- abricot 10y agoIf he doesn't get paid, there is no portion.
- tanderson92 10y agoThis is incorrect.
- microcolonel 10y agoTangential: why use a rare (and dying![0]) word for turns down ? I had to look up whether he was unhappy about it, disapproving of it, or turned it down. [0]: https://books.google.com/ngrams/graph?content=spurn&year_start=1600&year_end=2004&corpus=15&smoothing=3&share=&direct_url=t1%3B%2Cspurn%3B%2Cc0 https://books.google.com/ngrams/graph?content=spurn&year_sta...
- swang 10y agospurn is not a rare word. even according to your link its use has held since pretty much the 1980s.
- gaius 10y agoI saw someone use the phrase "spurned into action" the other day, which may be an autocorrect fail but if not it was a clever usage of the word.
- scentoni 10y agoFor clarification: https://en.wiktionary.org/wiki/spurn#Verb https://en.wiktionary.org/wiki/spurn#Verb https://en.wiktionary.org/wiki/spur#Verb https://en.wiktionary.org/wiki/spur#Verb
- deleted 10y ago[deleted]
- jondubois 10y agoPart of me thinks that this guy is a hero but my cynical side thinks that maybe he can get more out of the situation in the long term (in terms of reputation and future clients/contracts) by turning down the money (given that this news has worldwide coverage). Regardless of the motivation though; I think this move is good for society and sends the right message.
- varjag 10y ago8M is some serious cash, and this story will be forgotten next week. There's no need to put down people taking moral decisions. Cynicism is exactly the thing perpetuating problems like this, resist that in yourself.
- jondubois 10y agoUnfortunately, cynicism works. The cynical view is almost always the correct view. Every small success I've had in my life was won through the power of cynicism. For any event, if I have two possible explanations to choose from: a) A simple, pure, altruistic explanation or b) A complex, contrived 'evil' explanation I believe 'b' by default; unless there is sufficient proof to show otherwise. It needs to be reasonable proof, not consensus - Consensus means nothing; just look at all the different religions that exist - We know for sure that at least some of them must be wrong even though they have millions or billions of followers. I agree 100% though that it's a shame that the media doesn't do more write ups on these kinds of events - Reading the article, I also have the gut feeling that this is the kind of news which will be forgotten tomorrow. This is terrible when you consider that this article is actually pretty interesting/noteworthy in itself but also because it could lead to a lot of even more interesting articles (which will probably never be published unfortunately). Even lottery winners get better news coverage than this.
- ianamartin 10y agoYou keep using that word. . . . Cynicism has nothing to do with complexity or evil or contrivance. It's the belief that people are fundamentally motivated by self-interest. That's ethically neutral, at worst (best?). And it's also demonstrably false if you pay any attention to economics. It's not really easy to tell what does actually motivate people, but self-interest isn't it.
- bogomipz 10y agoI don't know which is more incredible, the fact that the SEC wants to give someone 8 million dollars for doing their job and having a sense of morality or that we live in a society where doing one's job is and being moral is newsworthy. Where does all the money that SEC collects in fine go? Nobody seems to know. It doesn't seem to go to anything that benefits the society that is regularly victimized by these white collar criminals. It doesn't go to an education fund for underprivileged people or donated to disease research. It just seem to go into to some discretionary slush fund that the SEC controls the purse strings on. Case in point, an 8 million dollar reward for doing the right thing. They dole out hundreds billion of dollars in fines a year. The dollar size of the individual settlements no longer phases the causal reader. The SEC seems like another part of this crooked banking machinery. Only in the United States can you pay a fine of 10s of millions of dollars and not have to admit wrong dong. Talk about theater. The fact that they were maybe going to start requiring admission of wrong doing in certain was itself a news item: https://www.washingtonpost.com/business/economy/sec-to-require-admissions-of-guilt-in-some-settlements/2013/06/18/9eff620c-d87c-11e2-a9f2-42ee3912ae0e_story.html https://www.washingtonpost.com/business/economy/sec-to-requi... In 2014 the SEC collected over 4 billion dollars in fines! http://wealthmanagement.com/industry/sec-collects-record-41-billion-fines-2014 http://wealthmanagement.com/industry/sec-collects-record-41-... I would love to buy this guy a beer. I also think he would accept and appreciate it.
- rayiner 10y agoSEC fines go to the US Treasury. DOJ fines may go to Treasury, into a general victims fund, or gets offset against DOJ's budget.
- jgalt212 10y agoWho's losses where they hiding? I have a few theories of whose trading counted for most of these losses.
- korias 10y agoThese were paper / model-based losses, i.e., they were for derivatives whose value dropped during the financial crisis, but whose value went back up after the crisis. Because they were illiquid and not traded during the crisis, these losses were never actually realized. See http://dealbreaker.com/2012/12/deutsche-bank-ignored-some-losses-until-they-went-away/ http://dealbreaker.com/2012/12/deutsche-bank-ignored-some-lo...
- jgalt212 10y ago> these losses were never actually realized a good portion of them were, but were further covered up by gains made by "fixing" Libor in 2008/9.