The Securities and Exchange Commission continues to make it clear that whistleblowers are among their most potent enforcement weapons in their law enforcement arsenal. In a press release on March 26, the SEC awarded a combined $50 million to two whistleblowers who provided info leading to a successful enforcement action against a major financial institution. Jane Norberg from the SEC’s Office of the Whistleblower referred to the involved whistleblowers and others who lead the enforcement as the “source of smoking gun evidence and indispensable assistance.” One whistleblower received $13 million, and the other won a $37 million award, which is the SEC’s third-highest whistleblower award as of yet. Our whistleblower attorneys view this particular case as another example of the SEC’s growing willingness to provide large sums of money to qualifying individuals.
The whistleblower is said to have provided information that helped the SEC and CTFC pursue action against JPMorgan Securities and JPMorgan Chase Bank. While the SEC did not openly name any involved party, the law firm representing the whistleblowers that received the smaller award has come forward with information. The charges involve allegations that from 2008-2013 JP Morgan failed to provide certain disclosures that would have been pertinent to their wealthy investors. Allegedly, JP Morgan steered clients towards its own mutual funds and hedge funds, without providing the proper disclosures. All in all, the whistleblowers’ original information allegedly assisted the SEC and the Commodities Futures Trading Commission with securing a $307 million settlement with JP Morgan.
As this case, as well as others show, whistleblowers have a lot to gain besides just helping restore public order and market integrity. Clients represented by whistleblower attorneys know that being an asset to the SEC can pay off. The SEC’s whistleblower program launched in 2011 to incentivize people to come forward after the passing of the Dodd-Frank Wall Street Reform and Consumer Protection Act. As part of the program, whistleblowers with original, timely and credible information are eligible to receive a percentage of recovered funds. Whistleblowers qualify if their tip helps the agency to achieve a successful enforcement action recovering least $1 million. The award, which ranges between 10-30% of recovered funds comes from an investor recovery fund set up by Congress. The investor fund is from sanctions paid from federal securities law violations. The Dodd-Frank Act also grants whistleblowers the right to anonymity and protection from employer retaliation.