Two whistleblowers are set to share a record $61 million award from the Securities and Exchange Commission (SEC) for helping make the case that JPMorgan Chase & Co. failed to disclose to wealthy clients that it was steering them into investments that would be most profitable for the bank. The SEC issued letters on July 19 notifying six whistleblower applicants of the preliminary decision.
Two of the whistleblowers would share almost a quarter of the record asset-management settlement that the SEC reached with the bank in December 2015. JPMorgan agreed to pay $307 million, with $267 million going to the SEC and $40 million to the Commodity Futures Trading Commission (CFTC). The four parties whose SEC awards were rejected provided information that didn’t lead to successful enforcement, the agency said.
Under the Dodd-Frank Act of 2010, the SEC and CFTC operate separate whistleblower programs. Each of the agencies can provide claimants between 10 percent and 30 percent of recoveries, based on the value of the information they provide. At press time the CFTC hasn’t made any whistleblower award determination in the JPMorgan case. The whistleblower set to receive the higher SEC award has also applied to the CFTC. The SEC says it is opposed to a whistleblower receiving a “double recovery” and that it will delay making a final determination until the CFTC renders its own decision or the whistleblower withdraws his or her application.
JPMorgan, the largest U.S. bank by assets, admitted disclosure failures from 2008 to 2013 related to two units that manage money – its securities subsidiary and its nationally chartered bank – as part of the SEC settlement. The New York-based bank said that the omissions in its communications were unintentional and that it has since enhanced its disclosures. Hopefully, the bank learned a lesson and will follow through on its pledge to folks who do business with them.