The US Securities and Exchange Commission has announced another whistleblower award, this one for over $2.2M. The whistleblower, an ex-insider of a company, had initially reported the information resulting in a successful SEC enforcement action to another federal agency before going to the SEC.
Under the Exchange Act Rule 21F-4(b)(7), the SEC will treat information that a whistleblower has given to another agency first as if it were submitted to the regulator at the same time, as long as the information is provided to the Commission within 120 days. When initially, the whistleblower voluntarily gave the information to the other federal agency, the latter “referred the matter” to the SEC, which conducted a probe. The whistleblower then gave the SEC the same information that was shared with the other agency.
SEC Office Whistleblower Chief Jane Norberg noted how this latest award is a prime example of how when even if a whistleblower provides the information to another agency first, he/she may still be eligible for an SEC whistleblower award as long as that same information is shared with the Commission within the safe harbor period and satisfies the other requirements for qualifying for the award. To date, the regulator has awarded 54 whistleblowers over $264M.
Last month, the SEC announced that two whistleblowers were collectively granted nearly $50M while a third person was awarded $33M in the largest whistleblower award to date. The Wall Street Journal reports that the three whistleblowers helped in an SEC enforcement case resulting in a $415M settlement. The civil case was related to allegations that Bank of America Corp. (BAC) inappropriately used customer monies and securities so it could profit while risking billions of dollars in client assets.
SEC Whistleblower Awards
A person may be eligible for an SEC whistleblower award if he/she provides original, quality information regarding violations of securities laws that result in a successful enforcement action rendering over $1M in monetary sanctions. In such instances, a whistleblower may be eligible for 10-30% of those sanctions collected. However, he SEC is not the only regulator that issues whistleblower awards.
In February, the Commodity Futures Trading Commission announced that it would pay one whistleblower $30M for the information that led to an approximately $367M settlement. JPMorgan (JPM) was accused of failing to tell its wealth management clients it had conflicts of interest that could have impacted the way client funds were managed. The bank also purportedly did not tell customers that it profited after putting their money in mutual funds and hedge funds that charged certain fees. Retail and high net worth customers were impacted by JPMorgan’s actions.
While the identities of whistleblowers involved in enforcement actions are supposed to be kept confidential to protect the individuals’ privacy and prevent retaliation, there are companies and supervisors that have been known to strike back at a whistleblower through a demotion, harassment, firing, or via other means. Whistleblowers may have grounds for filing a case in such situations.
More Blog Posts:
Barclays Settles DOJ’s Mortgage-Backed Securities Fraud Case for $2B, Stockbroker Fraud Blog, April 1, 2018
Massachusetts Regulator Accuses ARO Equity of $5.8M Ponzi Scam that Bilked Seniors, Stockbroker Fraud Blog, March 26, 2018
Massachusetts Investigates Wells Fargo Advisers, Stockbroker Fraud Blog, March 16, 2018