Is the SEC's New Enforcement Zeal for Real?

November 25, 2013

Jordan Thomas provides additional insight on the Deutsche Bank whistleblower case 

SEC Chairman White publicly declared her intent to get tougher on Wall Street. Bloomberg columnist William D. Cohan believes Labaton Sucharow's Deutsche Bank whistleblower suit may be the case that illustrates the new SEC administration's position.

Although Ben-Artzi's complaint is confidential, his attorney, Jordan Thomas, a partner at Labaton Sucharow LLP and a former senior SEC enforcement official, told me that Ben-Artzi hired the Kilgour Williams Group, a respected Toronto-based boutique investment bank that specializes in valuation work, to conduct a financial analysis of the Canadian CDO portfolio.

As part of that analysis, Kilgour Williams uncovered copies of Deutsche Bank's own contemporaneous analyses filed with the trustees of the CDOs. They showed that the Canadian CDO portfolio had been overvalued by Canadian $3.6 billion and likely much more, according to Kilgour Williams, when the time value of the options are factored in, among other reasons. That isn't quite the $10 billion to $12 billion that Ben-Artzi found, but not tin, either.