Chief SEC Investigator Could Lose Quarter-Million in Deutsche Bank Inquiry

The SEC’s Director of Investigations Robert Khuzami recently recused himself from pursuing an investigation against Deutsche Bank in regard to potential CDO malfeasance.

The SEC’s Director of Investigations Robert Khuzami recently recused himself from pursuing an investigation against Deutsche Bank in regard to potential CDO malfeasance.

The SEC’s Director of Investigations Robert Khuzami recently recused himself from pursuing an investigation against Deutsche Bank in regard to potential CDO malfeasance.

The SEC’s Director of Investigations Robert Khuzami recently recused himself from pursuing an investigation against Deutsche Bank in regard to potential CDO malfeasance.

On Wall Street, it is common knowledge that at DB the CDOs flowed — and were shorted “where appropriate” by Sub-Prime “Trader-in-Chief” Greg Lippmann and his henchmen– like manna from heaven.

The website zerohedge.com was curious just how large the conflict of interest must be for Khuzami to not pursue his official duty. [br]

They were able to answer this question when they recently managed to secure Mr. Khuzami’s Public Financial Disclosure Report for Executive Branch Personnel.

It appears that Mr. Khuzami, who from 2002 to 2009 worked at DB, most recently as General Counsel,

might have directly profited quite handsomely from the very activity for which he is now prosecuting Goldman, and very likely, quite soon, other banks as well.

How handsomely?

His 2007 bonus, 2008 salary and bonus, and 2009 salary added up to $3,804,537.

This works out to about $1.9 million in comp per year. [br]

And let’s not forget that 2006/2007 was the peak years for DB’s CDO issuance.

It sure seems Mr. Khuzami benefited nicely as a participant in precisely the kind of CDO gimmickry for which he is currently — and, in our view, appropriately — all over Goldman.

Yet most ironic is that Khuzami is expecting to receive, in August 2010, between $100,001 and $250,000 in vested deferred stock comp from Deutsche Bank.

Should he, or someone else at the SEC, commence an investigation into Khuzami’s former employer,

the SEC’s Director of Enforcement is sure to lose a substantial amount of money tied into the absolute value of Deutsche Bank stock.