UPDATE 1-German lawmakers seek Deutsche Bank whistleblower probe
* Ex Deutsche Bank employee turned whistleblower with SEC
* Employee said Deutsche failed to value portfolio correctly
* Deutsche Bank says allegations unfounded
FRANKFURT, Dec 6 (Reuters) - German politicians called for regulators to investigate claims by a former employee alleging Deutsche Bank AG had failed to recognise billions of euros in unrealised losses.
Law firm Labaton Sucharow LLP said Eric Ben-Artzi, a former quantitative risk analyst at Deutsche, used a whistleblower programme to tell the U.S. Securities and Exchange Commission (SEC) the bank failed to report the value of its credit derivatives portfolio correctly from 2007 through 2010.
Deutsche Bank said the allegations were unfounded but lawmakers called for German financial regulator BaFin to probe the allegations.
"What is now needed is the financial regulator to quickly and comprehensively uncover whether these allegations have merit. This is also in the interest of Deutsche Bank itself," said Gerhard Schick, a Green party parliamentarian.
The allegations highlight the opaque nature of bank valuation models, Schick said, adding the financial crisis could not be solved as long as banks were relied on to regulate themselves in terms of how their assets were valued.
Axel Troost, finance spokesman for the Left party, said: "The fact that something like this emerges shows that dozens of accountants and BaFin were asleep at the wheel."
BaFin declined comment.
Ben-Artzi said in a statement published by law firm Labaton Sucharow that he never wanted or expected to become a whistleblower.
"I reported internally first and extensively, in accordance with bank policies and procedures. As the problem was not acknowledged or corrected, I felt compelled to inform the proper law enforcement authorities," he said.
Deutsche Bank said it was cooperating with the SEC and dismissed the allegations.
"The allegations of financial misstatements, which are more than two and a half years old and were publicly reported in June 2011, have been the subject of a careful and thorough investigation and they are wholly unfounded," it said.
It also said the investigation had shown that the allegations stemmed from people without personal knowledge of, or responsibility for, key facts and information.
In June 2011, Reuters reported on a Sarbanes-Oxley whistleblower action filed against Deutsche Bank in May 2010 alleging that some of the assets in a derivatives portfolio may have been improperly valued in order to hide trading losses.
It was not immediately clear if the latest allegations were directly related to the same derivatives portfolio.
The Financial Times reported on Thursday that three former Deutsche Bank employees had filed complaints with the U.S. securities regulators claiming the bank failed to recognise up to $12 billion of unrealized losses during the financial crisis.