Two whistle-blowers are set to share a record $61 million award from the Securities and Exchange Commission for helping make the case that JPMorgan Chase & Co. failed to disclose to wealthy clients that it was steering them into investments that would be most profitable for the bank.
The SEC issued letters on Wednesday notifying six whistle-blower applicants of the preliminary decision. The letters said that two of them would share almost a quarter of the record asset-management settlement that the SEC reached with the bank in December 2015.
JPMorgan agreed to pay $307 million, with $267 million going to the SEC and $40 million to the Commodity Futures Trading Commission. The SEC wrote Wednesday that one person would receive 18 percent of the SEC portion of the settlement and the other 5 percent, which would translate to $48 million and $13 million.
The higher figure would dwarf the previous top SEC award, for $30 million, paid to an anonymous whistle-blower in 2014, according the figures posted on the agency’s website. The contents of the letters to the six award applicants, which were reported earlier by SourceMedia, were confirmed by people familiar with them. The SEC doesn’t identify whistle-blowers.
The SEC and JPMorgan declined to comment.
Under the Dodd-Frank Act of 2010, the SEC and CFTC operate separate whistle-blower programs. Each can provide claimants between 10 percent and 30 percent of recoveries, based on the value of the information they provide.
The CFTC hasn’t made any whistle-blower award determination in the JPMorgan case, the SEC said in the letter. The whistle-blower set to receive the higher SEC award has also applied to the CFTC, the SEC said. The agency wrote that it’s opposed to a whistle-blower receiving a “double recovery” and will delay making a final determination until the CFTC renders its own decision or the whistle-blower withdraws his or her application.
The four parties whose SEC awards were rejected provided information that didn’t lead to successful enforcement, the agency said. The parties have 60 days to appeal the SEC’s preliminary determination.
JPMorgan, the largest U.S. bank by assets, admitted disclosure failures from 2008 to 2013 related to two units that manage money — its securities subsidiary and its nationally chartered bank — as part of the SEC settlement. The New York-based bank said that the omissions in its communications were unintentional and that it has since enhanced its disclosures.
(c) 2017, Bloomberg · Neil Weinberg