It’s no secret that the SEC has been making a regular practice of awarding multi-million dollar awards over the past several years, and that the SEC Whistleblower office has shown no sign of slowing down as the Trump Administration has taken over a program that was started as part of the Dodd-Frank Act passed during the Obama administration.
But two recent awards made by the SEC to whistleblowers in March 2018 have made headlines due to the fact that they are both higher than any previous award made, with $83 million in whistleblower awards being paid out in total to three whistleblowers who brought forward information to the SEC, reportedly related to securities violations perpetrated by Merrill Lynch which led to a case brought against Bank of America, which purchased Merrill Lynch in late 2008.
Awards Related to $415 Million Settlement Against Bank of America
In announcing the awards, the SEC did not give details regarding the whistleblowers’ identities nor the underlying SEC violations forming the basis of the information provided by the whistleblowers to the SEC. While whistleblowers themselves may choose to reveal their identities, the SEC has a policy of maintaining anonymity on behalf of whistleblowers in order to protect their identity and prevent retaliation.
What we do know from the SEC is that the SEC awarded $50 million to two whistleblowers jointly and another $33 million to a separate whistleblower. The attorney for the three whistleblowers told the Wall Street Journal that the three individuals worked at Merrill Lynch as insiders and provided information to the SEC relating to complex transactions conducted at the bank which limited the amount of money to be set aside in accord with the SEC Consumer Protection Rule, which thereby illegally facilitated the bank to use customer funds for its own proprietary trading.
The violations occurred between 2009 and 2012, and resulted in a $415 million settlement between the SEC and Bank of America in 2016. The SEC typically awards whistleblowers with between 10% and 30% of the total recovery made by the SEC, and, in this case, $83 million works out to 20% of the entire recovery.
The SEC Has Awarded $264 Million to Whistleblowers Since 2010
The previous largest award ever made by the SEC to a whistleblower was $30 million. In total, the SEC awarded around $49 million in all of 2016. In total, the SEC has awarded around $264 million to 54 whistleblowers since the program began in 2010, with these awards accounting for around 30% of all the money ever awarded.
While the size of these awards is historic, it is important to note that the SEC often makes significant awards in much smaller cases as well, showing the agency is interested in both large and more modest-sized cases.
Recovering Your Own SEC Whistleblower Award
If you are aware of misconduct in your organization that violates SEC regulations, you too may be able to recover a significant financial reward by presenting information related to the misconduct to the SEC Whistleblower Office. By working with an experienced whistleblower attorney, you can not only improve your chances of recovering an award, but also take steps to protect yourself from retaliation in the process.
At Kreindler & Associates, we are committed to helping whistleblowers win maximum compensation by bringing wrongdoing to light, while taking all necessary precautions to protect their interests. To learn more about how Kreindler & Associates can help in your SEC whistleblower matter, see here.
