The Securities and Exchange Commission (SEC) chairman’s new chief counsel Robert Rice is entangled in a whistleblower’s case brought up by his ex-colleague at Deutsche Bank AG (ETR:DBK) (FRA:DBK) (NYSE:DB). His colleague Eric Ben-Artzi claimed that he was fired by Robert Rice for blowing the whistle on a fraud. Eric Ben-Artzi alleged that Deutsche Bank AG (ETR:DBK) (FRA:DBK) (NYSE:DB) misrepresented the value of credit derivatives on its books between 2007 and 2010, hiding as much as $12 billion in losses.
Robert Rice and Alleged Fraud
Robert Rice was appointed last week as the chief counsel to the new SEC chairman Mary Jo White. Before that he worked as the chief of governance, litigation and regulation at the American unit of Deutsche Bank AG (NYSE:DB) (ETR:DBK). Last year, Eric Ben-Artzi filed a complaint with the Department of Labor, alleging that Robert Rice fired him after he informed the SEC that the largest German bank had hidden billions of dollar of losses.
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Tom Braithwaite and Kara Scannell of the Financial Times received a copy of Ben-Artzi’s discrimination complaint. Eric Ben-Artzi named four Deutsche Bank AG (ETR:DBK) (FRA:DBK) (NYSE:DB) executives including Robert Rice as respondents. Eric Ben-Artzi also attended several meeting with Mr. Rice. Later on, Mr. Rice headed an internal investigation into the alleged fraud. Deutsche Bank AG (ETR:DBK) (FRA:DBK) (NYSE:DB) also hired external attorneys to look into the allegations. Currently, Germany’s Bundesbank and the SEC are conducting separate investigations. Deutsche Bank AG (ETR:DBK) (FRA:DBK) (NYSE:DB) said on Friday that Eric Ben-Artzi’s allegations are now three years old. According to the bank, the allegations have been thoroughly and carefully investigated, don’t hold any merit.
However, over the past three years, Eric Ben-Artzi and many other Deutsche Bank AG (ETR:DBK) (FRA:DBK) (NYSE:DB) employees have independently approached the SEC with a number of allegations against the German bank. All of them revolved around hiding losses on derivatives positions.
Deutsche Bank and SEC: Exchanging Employees
Mr. Rice’s appointment as the SEC chief counsel comes after a number of moves between Deutsche Bank AG (ETR:DBK) (FRA:DBK) (NYSE:DB) and the SEC. Robert Khuzami, the former head of SEC’s enforcement department, stayed away from all the Deutsche Bank AG investigations because he worked as the general counsel for the Americas at Deutsche Bank AG (ETR:DBK) (FRA:DBK) (NYSE:DB) between 2004 and 2009. The current general counsel of Deutsche Bank, Dick Walker, is the former chief of enforcement at the SEC.