Benjamin Solomon, Deutsche Bank AG's former global head of securitized-product trading, accused the company in a lawsuit of firing him on frivolous and unjust grounds amid an industry focus on supervisors’ responsibilities.
Solomon entered into an employment agreement with Deutsche Bank Securities Inc. in March 2011 and was terminated for cause in August, according to the lawsuit filed Sept. 18 in New York State Court. Solomon, who is seeking more than $10 million in compensation, said he never engaged in any conduct that would have justified his firing under that agreement, according to the complaint.
Ashish Jain, who ran sales in the Americas for the group, left the company in August the same week as Solomon, two people with knowledge of the matter said then. Two others in their group were terminated in June, industry records show.
"The proof will show that it was a frivolous and unjustified firing that had nothing to do with his conduct and had everything to do with Deutsche Bank seeking to deflect attention away from the fact that senior executives alleged to be involved in improper conduct have been allowed to leave the bank with no consequences," Solomon's lawyer, Judd Burstein, said in a phone interview.
Solomon was told that he "poorly supervised" his charges, and evidence will show he adequately supervised them, Burstein said.
Deutsche Bank didn’t immediately answer a phone call or respond to an email to its New York media office seeking comment on the lawsuit.
Trading in mortgage bonds and other securitized debt has come under heightened scrutiny since former Jefferies Group bond trader Jesse Litvak was accused of criminal securities fraud for lying to clients.
Banks including Nomura Holdings Inc., JPMorgan Chase & Co., Royal Bank of Scotland Group and Barclays have also dismissed traders or put them on leave during the past two years amid the investigations, according to people with knowledge of those moves and Financial Industry Regulatory Authority records.
Aaron Greenberg and Joseph Reardon, who worked in commercial mortgage-backed securities at Deutsche Bank, were terminated by the company in June after reviews indicated that each "violated firm policies with respect to customer communications," records maintained by Finra show.
A Group of 30 panel of influential former regulators and financiers published a report in July urging banks to become more aggressive in punishing senior managers for alleged misconduct by employees within their divisions to overhaul the industry’s culture.
If managers fail to catch misbehavior or subordinates fail to flag it, banks should slash or eliminate their bonuses, limit advancement opportunities or fire them, according to the report.
The benefits of publicly taking action, even when "gray areas" in employment laws might restrain it, outweigh the short-term cost if the employee challenges it in court.
Litvak was convicted in March 2014 by a federal jury in New Haven, Conn., of lying to buyers and sellers of mortgage-backed bonds. Litvak is appealing the decision.
