By KRISTEN OLIVER
Eric Ben-Artzi wouldn’t change what he did, but he wouldn’t advise anyone else to do it either.
The former quantitative risk analyst reported possible security violations with Deutsche Bank in 2011, which led to a Securities and Exchange Commission (SEC) investigation and a series of investigative articles in the Financial Times.
Ben-Artzi spoke to Auburn University Raymond J. Harbert College of Business students Monday about whistle blowing as part of the Government Accountability Project’s Whistleblower Tour.
“Whistleblowers under the law, the legal definition, are usually employees who expose concerns that they reasonably believe (to be) evidence of violation of law, rule, regulation … abuse of authority or substantial and specific damage to public health and safety,” said Dana Gold, American Whistleblower Tour director who moderated Ben-Artzi’s discussion Monday.
Gold asked Ben-Artzi a series of questions related to his discovery of Deutsche Bank’s alleged crimes, his process in addressing the issue and the repercussions he faced in doing so.
Ben-Artzi said he noticed inaccuracies in Deutsche Bank’s reports of the value of its credit derivatives portfolio, but was not immediately aware of the seriousness of the issue.
“I looked at some trades that I had previously seen in previous employment and I had some expertise on,” Ben-Artzi said. “I had some questions about how the risk was assessed. At first I just thought they were not issues, that these were mistakes. … Gradually my concerns became more serious.”
Ben-Artzi said once it was clear something was wrong, he wanted to be transparent and put everything he observed into writing.
After addressing his concerns internally to no avail, Ben-Artzi reported the violations through the SEC Whistleblower Program.
Within a week of filing his complaint with the SEC, Ben-Artzi was fired from Deutsche Bank. When he was fired, he was told “his commitment to Deutsche Bank was not questioned,” something Ben-Artzi said could be interpreted in several ways.
As a result, he has a wrongful dismissal suit against the bank. There is also an American investigation into the bank and a German investigation.
Eventually, reports showed that the bank hid over $10 billion in losses, according to Ben-Artzi. A student asked him to explain what the bank did in layman’s terms.
“Imagine you could borrow money endlessly,” Ben-Artzi said. “And take that money to Vegas and bet. If you lose, you just borrow more money and continue betting. If you win, you keep your gains. That’s not a very stable financial model for whoever it is that’s financing your gambling. In this case, the person financing was everybody in this room and everybody around the world.”
Ben-Artzi said what Deutsche Bank did is not very different from printing money in that it completely undermined the world financial system. He said he feels confident they would have gotten away with it had he not spoken up.
Gold thanked the students gathered in Lowder Hall Monday for their attendance and participation.
“I am so psyched to be back here,” Gold said. “This is my third visit to Auburn. I had never set foot in Alabama before we were invited by Dr. (Sarah) Stanwick to come here three years ago, and now it is like my adopted school. … I really love Auburn University.”