The Securities and Exchange Commission announced its largest-ever whistleblower awards, $83 million combined going to three whistleblowers who helped the agency reach a $415 million settlement with Bank of America Corp according to an SEC statement and a lawyer representing the whistleblowers. That 2016 settlement was the SEC’s second-biggest against a Wall Street bank. As part of the agreement, Bank of America resolved accusations that it misused customer cash and securities to generate profits, putting billions of dollars of customer assets at risk over a roughly six-year period.
The SEC, in keeping with its usual practice, didn’t specify Monday which settlement the whistleblower awards were connected to. But Jordan Thomas, a partner at Labaton Sucharow LLP who advises corporate whistleblowers, said he represented the three award recipients cited anonymously in the SEC announcement. Two recipients together were awarded roughly $50 million and another about $33 million.
Mr. Thomas confirmed that the whistleblowers provided original information to the SEC that helped the regulator in its investigation.An SEC spokesman declined to comment.Bank of America admitted to wrongdoing in agreeing to the 2016 settlement. In a statement at the time, the bank said, “While no customers were harmed and no losses were incurred, our responsibility is to protect customer assets and we have dedicated significant resources to reviewing and enhancing our processes. The issues related to our procedures and controls have been corrected.” The settlement covered a series of trades which the SEC lacked economic purpose and was designed to boost profits by reducing the amount of walled off deposits which BAC had as a cushion in case of financial problems. So called “lockup money” is not supposed to be used to generate profits.iSecurities-law provisions require minimum lockup amounts to protect customers who might need to be paid in an emergency. Some managers in the bank at times told colleagues that the SEC had signed off on the same trades that ultimately led to a portion of the bank’s settlement, the Wall Street Journal reported in 2015.
The SEC said the record awards show that whistleblowers can provide “incredibly significant information” that can help the regulator remedy serious violations. The previous record SEC whistleblower award was $30 million, in 2014.
SEC awards since 2012 now total more than $262 million to 53 whistleblowers. The money comes out of monetary sanctions paid to the SEC.
Jeffrey Newman represents whistleblowers.
