Who needs to work when you can just expose your boss’ criminal ways and retire with the “whistelblower” proceeds?
That’s the question three former Merrill Lynch insiders will ask themselves after their tips led to both a successful enforcement against parent company Bank of America in a $415 million settlement for engaging in complex transactions which allowed the bank to reduce the amount of client funds that had to be set aside in reserve accounts and – more importantly – the largest ever whistleblower award amounting to $83 million.
Two of the recipients will split a $50 million award, while a third person will receive $33 million for a tip in the same case.
The previous record was $30 million in 2014 – all done under an award provision under the post-crisis Dodd-Frank law.
Jordan Thomas, an attorney with Labaton Sucharow, said he represented the Merrill insiders but declined to name them or say whether they still worked for the Bank of America unit. The three provided information that helped the SEC win a $415 million settlement with the bank in 2016 for engaging in complex transactions to reduce the amount of client funds that had to be set aside in reserve accounts. –Bloomberg
“By coming forward, these courageous executives protected millions of Merrill Lynch’s customers, but their impact is far greater than that,” Thomas said in a statement. “They are a shining example of integrity in action and will inspire others on Wall Street to break their silence.”
A “substantial part” of the award will be donated to charities, said Thomas – who ironically helped develop the SEC’s whistleblower program while employed in the agency’s enforcement unit. Thomas then launched Labaton Sucharow’s division representing tipsters in 2011.
One almost wonders how much Thomas’ legal fees will be as a result of a program developed by, well, Thomas.
Naturally, the SEC which will pocket the vast majority of the settlement proceeds, was delighted:
“These awards demonstrate that whistleblowers can provide the SEC with incredibly significant information that enables us to pursue and remedy serious violations that might otherwise go unnoticed,” said Jane Norberg, chief of the SEC’s whistleblower office. “We hope that these awards encourage others with specific, high-quality information regarding securities laws violations to step forward and report it to the SEC.”
Individuals who provide credible and timely information to the SEC resulting in a successful enforcement action may be able to claim between 10 and 30% of monetary penalties over $1 million.
This in turn has prompted many on Wall Street to ask why work? Just scope out your employer for grossly illegal behavior, report it to the SEC and then retire with the proceeds.
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