The U.S. Securities and Exchange Commission said that it has awarded a whistleblower over $900K for a tip that allowed the regulator to bring multiple enforcement actions. The regulator announced the award just a days after it awarded another whistleblower $3.5M, also for coming forward with information resulting in an enforcement action.
Since 2012, the regulator’s whistleblower program has awarded about $136M to 37 individuals. The SEC protects the identities of whistleblowers, which is one reason it doesn’t disclose details about the enforcement cases.
It is against the law for companies to retaliate against employers for turning whistleblower, and there are protections, as well as remedies in place in the event of retaliation. Whistleblowers who provide the SEC with unique and helpful information that makes it possible for a successful enforcement action rendering over $1M in monetary sanctions are entitled to 10-30% of the funds collected.
In other whistleblower-related news, three former Prudential (PRU) employees who had turned whistleblower have sued the insurer. They claim that they were fired because they reported questionable sales practices involving the sale of Prudential term life insurance policies when the transactions occurred through a Wells Fargo’s (WFC) retail bank. The sale of the Prudential policies have been linked to the cross-selling scandal involving Wells Fargo. Prudential, meantime, is arguing that the ex-employees were fired for different reasons.
Another, albeit unrelated, whistleblower lawsuit currently making headlines is the one recently filed against JPMorgan Chase & Co. (JPM) by a former employee. The firm last year paid over $300M to settle regulator claims accusing the bank of not telling rich clients that it was directing them toward its own funds. At the time, JPMorgan admitted that there had been unintentional disclosure lapses, and it promised greater transparency.
Now, however the ex-employee is accusing the firm of wrongful acts beyond inadequate disclosures. The whistleblower claims that because part of these clients’ funds were in tax-advantaged pension funds, the bank violated IRS rules and ignored its fiduciary duty when it favored its own funds. The ex-employee had cooperated with the SEC in its securities case against JPMorgan.
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The SEC Order Regarding the Whistleblower Award (PDF)
Prudential Whistleblower Rocks the Boat on Wells Fargo Scandal, Bloomberg, December 19, 2016
JPMorgan Draws IRS Whistleblower Complaint Over Pension Funds, Accounting Today, December 19, 2016