Whistleblowers who provided tips to federal regulators about JPMorgan Chase & Co.’s failure to properly inform some wealthy investors about conflicts of interest are set to receive record monetary awards.
The whistleblowers helped the Securities and Exchange Commission (SEC) and the U.S. Commodity Futures Trading Commission (CFTC) put the brakes on JPMorgan’s misconduct, resulting in a record $367 million asset-management agreement.
According to Bloomberg, the record JPMorgan settlement included $100 million that went to the CFTC, “described as a $40 million monetary penalty and $60 million in disgorgement.” The bank also agreed to pay the SEC an additional $267 million.
In a preliminary decision last July, the SEC informed one of the whistleblowers that he would receive an award of $48 million – about 18 percent of the total – and that a second SEC whistleblower would receive $13 million, bringing the total SEC whistleblower awards to $61 million.
The $48 million award sets a new record for an SEC whistleblower. The previous record award of $30 million was given to a foreign whistleblower in 2014.
The CFTC also paid out its highest-ever award to a whistleblower involved in the JPMorgan case. Bloomberg reports that the agency will pay one whistleblower $30 million. Four others had applied for a CFTC whistleblower award but they had either applied too late or their information didn’t help in the agency’s investigation and enforcement action.
The CFTC paid its previous record award of $10 million to a whistleblower in 2016.
Both the SEC and CFTC whistleblower programs were established by the Dodd-Frank Act of 2010 to combat the rampant Wall Street fraud that led to the economic meltdown of 2008-2009. The agencies can award whistleblowers between 10 percent and 30 percent of any sanctions resulting from their case.
“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,” Bloomberg reported.