The demand comes after Law firm Labaton Sucharow LLP said Eric Ben-Artzi, a former quantitative risk analyst at Deutsche, used a whistleblower programme to tell the US Securities and Exchange Commission (SEC) the bank failed to report the value of its credit derivatives portfolio correctly from 2007 through 2010. Deutsche Bank has rejected the claims as unfounded. Deutsche Bank declined to comment on Friday on whether the supervisory board was demanding answers from management.
The topic of valuations will be discussed at the next supervisory board meeting in late January, another person familiar with the supervisory board's thinking said on Friday. The general nature of the allegations about disagreements over valuation of credit derivatives was known and had been discussed by the supervisory board, the second source said.
In June 2011, Reuters reported on a Sarbanes-Oxley whistleblower action filed against Deutsche Bank in May 2010 alleging that some of the assets in a derivatives portfolio may have been improperly valued in order to hide trading losses. However, news reports this week alleging the bank failed to recognise up to $12 billion of unrealised losses during the financial crisis raised "some new questions about the magnitude," the first source familiar with the supervisory board's thinking said. The Financial Times reported on Thursday that three former Deutsche Bank employees had filed complaints with the US securities regulators claiming the bank failed to recognise up to $12 billion of unrealised losses during the financial crisis.