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Deutsche Bank Bond Analyst Leaves After Research ‘Similarities’

Deutsche Bank AG research analyst Pankaj Jha left the firm after it told clients one of his reports contained “significant similarities” to an article from Royal Bank of Scotland Group Plc.

Jha departed his position in New York as a mortgage-bond analyst this week, according to people familiar with the matter who declined to be identified because they weren’t authorized to discuss it. Jha and John Gallagher, a spokesman for the Frankfurt-based bank, declined to comment.

While an analyst borrowing from the research of a competitor isn’t unusual, it’s rare for attention to be drawn to the issue, said Linda Lowell, who spent more than 20 years as a mortgage-bond analyst at firms including Paine Webber, Credit Suisse First Boston and RBS Greenwich Capital.

“I can tell you from personal experience that people copy other people’s research,” said Lowell, now principal at OffStreat Research LLC in Ossining, New York. “There’s also a ton of complaining that, ‘This looks just like what I did last week.’ If it’s something that can be demonstrated, man, I feel sorry for the guy. People are under so much pressure to produce.”

Deutsche Bank distributed a revised version of its regular “The Outlook: In MBS and Securitized Products” report on July 19, excising an article by Jha, “Aspects of Convexity Hedging in the Current Environment,” that was included in the original issue dated five days earlier.

‘We Apologize’

“That article has been removed after finding significant similarities to an article entitled ‘Convexity Hedging in a Low Rate Environment’ published by The Royal Bank of Scotland on 30 June 2010 and authored by Greg Reiter, Jeana Curro and Sarah Hu,” Deutsche Bank said in a note appended to the first page of the report. “We apologize for the confusion and inconvenience.”

Deutsche Bank didn’t state that the similarities were intentional or the result of wrongdoing.

Michael Geller, a spokesman for Royal Bank of Scotland’s RBS Securities Inc. unit in Stamford, Connecticut, declined to comment.

Jha joined Deutsche Bank in November, after serving for four months as a “Senior MBS Trader/Analyst” at the Federal Reserve Bank of New York, according to his profile on the LinkedIn website.

He previously worked in mortgage research at RBS from 2006 to 2008, and before that Citigroup Inc., JPMorgan Chase & Co. and Lehman Brothers Holdings Inc., according to the website.

‘Runner-Up’ in Rankings

“I am an II ranked analyst with over 10-years of experience in MBS research and strategy,” he said in the profile, referring to Institutional Investor magazine survey rankings.

Jha co-led a team at RBS Greenwich Capital, a former name for RBS Securities, that earned a “runner-up” ranking in the “MBS/Agency - Structured Products” category in 2007, meaning below a top-three placing, according to the magazine’s website.

At Deutsche Bank, he wrote about mortgage-backed securities carrying government-backed guarantees.

“The Fed MBS purchase program not only helped in lowering mortgage rates, but kept them range-bound, which in turn stabilized mortgage prices, reducing the need to hedge out volatility and convexity,” Jha’s last report began.

The June 30 report by RBS Securities strategists started, “The Fed MBS buying program not only lowered mortgage rates in 2009 but kept them range-bound, stabilizing mortgage prices and the need to hedge out volatility and convexity.”

His report included five charts that were the same or almost identical to ones in the RBS article.

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