SEC Grants $50 Million Award To Two JPMorgan Whistleblowers (#GotBitcoin?)
One of the tipsters received $37 million, the third-largest award in the history of the agency’s whistleblower program. SEC Grants $50 Million Award To Two JPMorgan Whistleblowers (#GotBitcoin?)
Two whistleblowers received a total of $50 million for providing information that helped the Securities and Exchange Commission pursue a case of corporate wrongdoing, the agency said Tuesday.
The case is related to a December 2015 settlement with JPMorgan Chase & Co., according to law firm Labaton Sucharow LLP, which represented one of the whistleblowers. In the case, the New York-based bank agreed to pay $307 million to settle charges it failed to disclose conflicts of interest to its wealth management customers.
The agency granted $37 million to one whistleblower—the third-biggest individual whistleblower award granted by the SEC—and $13 million to the other.
The SEC didn’t disclose details of the case in a news release or provide identifying details about the whistleblowers.
One tipster received $50 million in March, and another received $39 million in September, according to the SEC.
Tips To SEC Surge As Working From Home Emboldens Whistleblowers
Over 4,000 reports of potential wrongdoing poured in from mid-March to mid-May. ‘These people have more time on their hands,’ a lawyer says.
A new side effect of remote working, layoffs and furloughs stemming from the coronavirus pandemic: more whistleblowers.
The U.S. Securities and Exchange Commission received about 4,000 tips, complaints and referrals of possible corporate wrongdoings from mid-March to mid-May, said Steven Peikin, co-director of the SEC’s enforcement division. That number is 35% higher than it was in the same period last year. The tips have led to hundreds of new investigations—“many Covid-19 related, but many in other traditional areas,” Mr. Peikin said in a recent speech.
Lawyers chalk up the increase to the fact that many would-be tipsters are working from the privacy of their home, out of view of snooping colleagues and managers and thus safer from being exposed as whistleblowers. Tipsters might also feel less concerned about retaliation if they are not interacting regularly with their managers, lawyers say; if they have been furloughed or laid off, they might feel even less so.
“These people have more time on their hands,” said Christopher Connors, a managing attorney at the Connors Law Group in Chicago, whose team has taken on at least seven new whistleblower clients since the end of February—a big increase for the firm. “They don’t have to go see their bosses, and they may feel a bit more emboldened to report,” he said.
When employees face pressure to meet goals during difficult financial times, the likelihood of wrongdoing can increase. Anticorruption organizations have warned that the current economic tumble could create an environment ripe for bribery.
In recent months, Mr. Connors’ clients have raised red flags on possible foreign corruption in health care, pharmaceuticals and technology to the SEC, the Justice Department and the Federal Bureau of Investigation.
Stuart Meissner, an attorney at Meissner Associates in New York, said some of the whistleblower cases brought to him are connected to the pandemic, such as small, public companies promoting home-testing kits that were allegedly fictional. Others presented more typical infractions such as money-laundering, insider trading, accounting gambits and bankruptcy fraud, unrelated to the pandemic, he said.
The economic spiral following coronavirus lockdowns is likely a factor in the rise in calls and reports he has received in recent weeks, he said.
“This caused companies to do things—whether they worry about survival or failures—that often lead to people doing wrong,” said Mr. Meissner, who said he has filed five complaints on behalf of clients to the SEC.
A record number of whistleblower awards from the SEC this year may also have incentivized more people to report wrongdoing, said Rebecca Katz, who leads the whistleblower litigation team at Motley Rice LLC in New York.
Under SEC rules, a whistleblower can get between 10% and 30% of the fines levied in SEC civil enforcement actions that result from their tip, assuming the fines total more than $1 million.
Over $64 million was paid to whistleblowers in the seven months of the fiscal year that began in October—more than the SEC has disbursed in any full year except 2018, according to an analysis of agency records. Most of that total was awarded just since March 23.
Publicity of those awards might have tempted tipsters to come forward, Ms. Katz said.
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