Troy Dixon had hit the big time: he’d gone, as they say in his old neighborhood, from “Hollis to Hollywood.”
It was a June night last year at the Apollo Theater, the legendary Harlem spot that’s helped launch stars from Billie Holiday to Michael Jackson, and Dixon was back-slapping his way through the annual spring gala.
Dixon, a member of the Apollo’s celebrity-studded board, is a star of a different sort. First at Deutsche Bank AG and now at his own hedge fund, he’s become one of the most powerful -- and controversial -- figures in the $6 trillion market for government-backed mortgage bonds.
The story of his journey from Hollis, a working- and middle-class neighborhood in Queens, to the pinnacles of finance is a tale of outsize trades and power plays. In the arcane world of mortgage securities, no one was bigger, no one bolder. At one point, Dixon built up a $14 billion position, among the largest anywhere at the bank. Word spread that he effectively controlled a quarter of his target market, inspiring awe and ill-will among rivals, even within his own bank, and raising eyebrows at the Federal Reserve Bank of New York.
Trading Loss
Only now, more than two years after Dixon struck out on his own, the story of his meteoric rise has become something else too: a tale of a half-billion-dollar trading loss that has belatedly drawn the attention of federal authorities.
At issue is who is ultimately responsible for losses that Deutsche Bank ran up in the aftermath of the 2008 financial crisis, when Dixon, now 44, ran a mortgage-backed trading desk there. The Securities and Exchange Commission wants to know what happened and, specifically, how the German bank accounted for certain bonds as they lost value. A whistle-blower has filed a complaint with the SEC claiming the bank inflated some of the values, according to people with knowledge of the complaint.
Neither Dixon nor Deutsche Bank has been accused of wrongdoing by authorities. Representatives for Dixon and the bank declined to comment about the inquiry, as did a spokeswoman for the SEC. Deutsche Bank has said it’s cooperating with the SEC.
It’s a remarkable turn of events for Dixon, who has been hailed as one of the most powerful African-Americans on Wall Street by Black Enterprise magazine.
‘Market Leader’