
Deutsche Bank Whistle-Blower Spurns $8M SEC Reward - denzil_correa
http://www.bloomberg.com/news/articles/2016-08-19/deutsche-bank-whistle-blower-spurns-8-million-reward-from-sec
======
guardiangod
Here is the whistle-blower's opinion piece on FT-
[http://www.ft.com/cms/s/0/b43d2d96-652a-11e6-8310-ecf0bddad2...](http://www.ft.com/cms/s/0/b43d2d96-652a-11e6-8310-ecf0bddad227.html)

 _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
Basically 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.

~~~
Dobbs
I 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
Yes; that's what I mean. First move the stolen goods back to the victims from
the robbers. _Then_ apply any additional penalty.

------
sfrailsdev
Wealthy 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
Most 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.

~~~
greenleafjacob
In 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)

------
joeyo

      > 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
No, they get to keep their portion.

~~~
abricot
If he doesn't get paid, there is no portion.

~~~
tanderson92
This is incorrect.

------
lifeisstillgood
most 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
Where is the Netflix documentary that goes deeper into this pattern

how about John Oliver

------
bogomipz
I 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-
requi...](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)

In 2014 the SEC collected over 4 billion dollars in fines!
[http://wealthmanagement.com/industry/sec-collects-
record-41-...](http://wealthmanagement.com/industry/sec-collects-
record-41-billion-fines-2014)

I would love to buy this guy a beer. I also think he would accept and
appreciate it.

~~~
rayiner
SEC fines go to the US Treasury. DOJ fines may go to Treasury, into a general
victims fund, or gets offset against DOJ's budget.

~~~
bogomipz
Yes that much is known. Then what happens to that money once it's added to the
Treasury's balance sheet? How is allocated or apportioned? We are talking
about billions of dollars a year. Nobody knows. Its a black box.

~~~
rayiner
It's not allocated or apportioned. It goes into the Treasury's general find.
So it goes to paying all of the things the government pays for: Medicare,
social security, and war.

~~~
bogomipz
No, taxes fund those.

~~~
rayiner
The US government spends more than it brings in with taxes. Fines deposited
into the treasury general fund make up part of that difference.

------
deegles
Why not use the money to fund a lawsuit to get the results he wants?

~~~
Zenst
Maybe his comment “I will not join the looting of the very people I was hired
to protect.” explains that.

~~~
deegles
Right, but didn't the bank still have to pay the money?

~~~
jlarocco
If 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.

------
jondubois
Part 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
8M 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
Unfortunately, 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.

~~~
varjag
Cynicism works, but not for the bearer. Cynical people are easy to manipulate,
their smug worldview notwithstanding.

"Cynicism masquerades as wisdom, but it is the farthest thing from it. Because
cynics don’t learn anything. Because cynicism is a self-imposed blindness, a
rejection of the world because we are afraid it will hurt us or disappoint
us." \- Stephen Colbert

------
jgalt212
Who's losses where they hiding? I have a few theories of whose trading counted
for most of these losses.

~~~
korias
These 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-
lo...](http://dealbreaker.com/2012/12/deutsche-bank-ignored-some-losses-until-
they-went-away/)

~~~
jgalt212
> 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.

------
microcolonel
Tangential: 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_sta...](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)

~~~
swang
spurn is not a rare word. even according to your link its use has held since
pretty much the 1980s.

~~~
gaius
I 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
For 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)

