There are numerous cynics who think that whistleblowers are greedy jackpot-seekers. In fact, most whistleblowers don’t receive financial awards, and recently, one person who stood to receive a particularly large award turned it down. That person is Eric Ben-Artzi.
It was reported that Ben-Artzi turned down an $8.25 million whistleblower award from the Securities and Exchange Commission (SEC). Ben-Artzi helped the SEC recover $55 million from his company, Deutsche Bank, for improper accounting. It is believed to be the first time in the five-year history of the SEC’s whistleblower program that an award was refused.
Ben-Artzi said he is protesting the agency’s punishing Deutsche Bank as a whole instead of the individual executives who committed or abetted the misconduct. He believes the handling of the matter was influenced by the fact that several of the bank’s executives have “revolved” in and out of the SEC over the years.
The Ben-Artzi case highlights two issues of longstanding interest to the Project On Government Oversight: whistleblower rights and the revolving door between the SEC and Wall Street. Ben-Artzi, like many whistleblowers, was fired after he reported the wrongdoing. Fortunately, he found redemption after reaching out to the SEC, although the outcome left him disappointed.
In a sense, Ben-Artzi blew the whistle twice: first to the SEC about his company’s misconduct, then to the public about the cozy relationship between federal agencies and the firms they regulate. Deutsche Bank executives who went to work at the SEC in recent years include Robert Khuzami, who was a general counsel at the firm before becoming director of enforcement at the SEC, and Robert Rice, who was also a senior lawyer at Deutsche Bank before moving over to the SEC. Going through the revolving door in the opposite direction is Richard Walker, who joined Deutsche Bank after serving as director of enforcement at the SEC. At least six former SEC officials took jobs at the company, according to POGO’s SEC Revolving Door Database.
We praise the SEC’s efforts to protect whistleblower rights, but remain concerned about the agency’s close ties to Wall Street. The SEC should follow the Justice Department’s new policy of holding individual corporate executives accountable. Let’s hope the publicity generated by Ben-Artzi’s protest leads to an enforcement policy from which even the most well-connected occupants of executive suites will not be spared.