Two Whistleblowers Earn Record $61m from JPMorgan Tip

The US Securities and Exchange Exchange An exchange is known as a marketplace that supports the trading of derivatives, commodities, securities, and other financial instruments.Generally, an exchange is accessible through a digital platform or sometimes at a tangible address where investors organize to perform trading. Among the chief responsibilities of an exchange would be to uphold honest and fair-trading practices. These are instrumental in making sure that the distribution of supported security rates on that exchange are effectiv An exchange is known as a marketplace that supports the trading of derivatives, commodities, securities, and other financial instruments.Generally, an exchange is accessible through a digital platform or sometimes at a tangible address where investors organize to perform trading. Among the chief responsibilities of an exchange would be to uphold honest and fair-trading practices. These are instrumental in making sure that the distribution of supported security rates on that exchange are effectiv Read this Term Commission (SEC) Whistleblower Whistleblower A whistleblower is an individual who manages to provide information or activity within a private or public organization that is deemed illegal, unethical, or not correct. In many countries, including the United States, whistleblowers are protected by law and in some cases can even recoup rewards if their information leads to successful prosecution.In the context of the financial services industry, whistleblowers play a large role in oversight, helping unmask several episodes of illicit behavior A whistleblower is an individual who manages to provide information or activity within a private or public organization that is deemed illegal, unethical, or not correct. In many countries, including the United States, whistleblowers are protected by law and in some cases can even recoup rewards if their information leads to successful prosecution.In the context of the financial services industry, whistleblowers play a large role in oversight, helping unmask several episodes of illicit behavior Read this Term program is set to make its largest payout to date. Two individuals are poised to earn an award of $61 million for their role in tipping off the regulator to a recent JPMorgan nondisclosure – the sum easily surpasses the previous record of $30 million set back in 2014.

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The award centered on JPMorgan’s lapse in disclosure. It failed to inform wealthy clients that it was nudging them towards investment instruments that would ultimately have reaped the greatest profits for the bank. Consequently, JPMorgan forked over $307 million to both the SEC and the US Commodity Futures Trading Commission (CFTC), according to a Bloomberg report.

On its part, JPMorgan fully admitted its disclosure failures that took place over a five-year period between 2008 to 2013. This entailed its securities subsidiary and its nationally chartered bank, according to regulatory filings. Despite the settlement, the US bank noted that its failure to properly disclose information to investors was unintentional.

Payday

JPMorgan paid a fine of $267 million to the SEC, with $40 million going to the CFTC. One of the SEC’s whistleblowers was entitled to 18 percent of the SEC portion while the other took 5 percent, or $48 million and $13 million respectively.

The range for whistleblower awards varies between 10 and 30 percent of the money collected. $61 million corresponds to roughly 23 percent of the initial fine. While the CFTC has not made any whistleblower awards, both regulators run sovereign programs. The individual who just collected $48 million has also applied to the CFTC program, though the CFTC shot down any prospect of a ‘double-recovery’ in terms of awards.

The programs each have their roots back in the 2010 Dodd-Frank Act – the whistleblower program was originally established by Congress to help incentivize whistleblowers to provide specific, timely and credible information about federal securities law violations.