Whistleblower Award: “Smoking Gun Evidence and Indispensable Assistance”

whistleblower gang

Background

The SEC awarded two whistleblowers $50 million in the same case – $13 million and $37 million.

The $37 million award is the SEC’s third-biggest award ever. The redacted SEC award said the whistleblower awarded $37 million had provided “smoking gun” evidence.

Recall the largest SEC’s whistleblower award issued in March 2018 was $50 million, which was shared by two former Merrill Lynch employees. A third former Merrill Lynch employee was awarded $33 million in the same case.

Merrill Lynch over many years “executed complex options trades that lacked economic substance and artificially reduced the required deposit of customer cash in the reserve account.” Merrill Lynch admitted wrongdoing and paid $415 million to settle charges that it misused customer cash to generate profits. The firm also failed to safeguard customer securities from the claims of its creditors.

Silhouette of business people negotiating at meeting table

Other Claimants

Interesting, the SEC denied claims submitted by two other whistleblowers in the same case. One of them provided information that wasn’t “original,” the SEC said, and the other didn’t file their claim in a “timely” manner under the whistleblower regulations.

Conclusions

Hire a competent attorney who knows the rules; be sure there is a material violation; act fast or timely; come with complete, accurate, and genuine or original information; and, make a compelling case.

Apparently this is what Claimant 2 did and Claimant 4 didn’t!

I welcome your thoughts and comments.

Best,

Jonathan T. Marks, CPA, CFE

Attribution:
SECURITIES EXCHANGE ACT OF 1934 Release No. 85412 / March 26, 2019 WHISTLEBLOWER AWARD PROCEEDING File No. 2019-4
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