, Bloomberg

The Financial Times reported Dec. 5 that not one but three separate whistleblowers have told the SEC that Deutsche Bank (DB) didn’t properly report paper losses during the financial crisis, a move that let the bank appear healthier than it was and avoid a government bailout. They say the bank hid up to $12 billion in paper losses on derivatives trades.

Deutsche Bank says the allegations are “wholly unfounded” and that the bank’s valuations were “proper.” Just how Deutsche Bank allegedly hid the losses—and whether it matters—is quite confusing. (Blogger Felix Salmon tries to translate and concludes, “there’s a strong case to say ‘no harm, no foul.’”)

But one thing is clear: We’re likely to see more financial whistleblowing cases in the future. That’s because the Deutsche Bank case is part of a new program developed under the Dodd-Frank financial reform bill specifically designed to encourage insiders to share tips. As Iexplained in February, if a whistleblower provides original information that helps the SEC successfully impost sanctions of more than $1 million, the awards range from 10 percent to 30 percent, depending on a number of factors, such as the uniqueness of the information and whether the whistleblower reported the problems internally first.

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