A new compensation plan at Deutsche Bank is a 'game changer' when it comes to clawing back bonuses, John Singer, an employment attorney at Singer Deutsch, told CNBC’s Closing Bell earlier this week.
'I thought clawbacks in and of themselves were problematic because they weren’t just clawing back money from the perpetrators of the illegal or losing trades', Singer said. 'There was collateral or ancillary damage as well because trades on the desk were getting their bonuses clawed back based on the actions of their superiors'.
But this is a game changer, he said, referring to Deutsche Bank’s plan to go after compensation from previous employers.
The German bank’s new rules will allow it to take back unvested shares that newly hired senior staff received in exchange for stock awarded at another bank.
Singer said that the new rules are simply a way to stay a step ahead of regulators. 'The more draconian compensation policy they can enact will certainly placate and mollify the regulators', Singer said.
Jacob Zamansky, a partner at Zamansky & Associates, favors clawbacks when there is wrong doing like rogue trading, money laundering and excessive risk taking. 'I think traders need to have this hanging over their heads', he told CNBC. 'It will make them think twice about doing the wrong thing'.
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